The recession – still in full force in western Pennsylvania – didn’t stop more than 200 people from attending Bridgeway Capital’s 2009 annual meeting. Held at the Circuit Center and Ballroom on the South Side on Tuesday, Nov. 17, the meeting focused on perspectives surrounding the recession, Bridgeway Capital’s priorities to finance and educate entrepreneurs, and how perseverance leads to sustainability and growth.

To emphasize continued growth and entrepreneurship, the event included a much-expanded Borrower Showcase with nearly 20 small businesses and nonprofits that have started, sustained, or even grown during the recession.

As the meeting began, guests were asked to take a broader look at the environment to better understand Bridgeway Capital’s role in growing the economy. Mark Peterson, President, talked about key perspectives, including bank lending being significantly down. As banks have worked through this crisis, credit has continued to be very difficult to obtain. Organizations like Bridgeway Capital, a Community Development Financial Institution (CDFI) designated by the U.S. Treasury Department, were created to respond to gaps in the capital markets to provide critical capital and services just outside the margins of mainstream finance. As market-driven, private sector financial intermediaries with a social mission, CDFIs in the United States have an aggregate portfolio of more than $25 billion.

Because of the CDFI industry’s growing importance, national media – such as The Wall Street Journal, The Washington Post, ABC News, and USA Today – have begun to pay attention. One of Bridgeway Capital’s borrowers, EarthTone Greetings, was quoted on MSNBC about their business, the importance of small business loans, and how the microloan helped them follow their dream.

The CDFI Fund’s budget is predicted to double next year because of the growing importance of its industry. Bridgeway Capital received a grant of 2 million dollars from the Fund, which was the maximum award in 2009. Mr. Peterson explained that Bridgeway Capital will use these funds to expand its pool of capital, attract new capital from investors, and increase its loan loss reserve to better weather the recession.

Guests learned that entrepreneurship is essential, especially during a recession, because entrepreneurs create new jobs. Historically, there is a higher rate of creation of new companies during a downturn; in fact, more than half of the companies on the Fortune 500 list started during a recession. The current recession has enabled Bridgeway Capital to reach more small businesses. In fiscal year 2009, Bridgeway Capital placed 7.4 million dollars in 83 loans, including 43 entrepreneur loans to small and start-up businesses. Seventy percent of the loans benefited low income people, and 40 percent of the entrepreneur loans went to businesses owned by members of minority groups. Loan inquiries were up 63 percent from the prior year.

Mr. Peterson explained that these tough times require that Bridgeway Capital examine what has worked for them in the past and its priorities moving forward. Making an impact on the region’s economy is the biggest priority, and the company primarily does this by financing small businesses and other organizations. The impact has been great so far – financing has resulted in 574 loans for $63 million and 5,000 jobs created or retained. To highlight this impact further, Mr. Peterson introduced two videos about growing and start-up organizations: Animal, a visual effects company that specializes in talking animals, and a Curves exercise franchise started by a first-time entrepreneur. Each story highlighted growth during the current recession.

After the videos, Mr. Peterson discussed a second priority: incorporating business education opportunities to increase entrepreneurship and expand economic development. Bridgeway Capital maintains partnerships with various education institutions, Small Business Development Centers, and other organizations to promote valuable opportunities for small businesses to sustain and grow. Traditionally, CDFIs offer training and technical assistance to increase borrower capacity and mitigate risk. This educational training should lead successful borrowers to graduate to conventional financing when mainstream credit begins to flow.

The third priority is to communicate opportunities and results on a regular basis. Mr. Peterson introduced Castle Co-Packers, a bottling company located in New Kensington, that has strategically communicated its growth and impact very well. Brian Dworkin, President, spoke about new initiatives at Castle Co-Packers, including its energy-saving “green” techniques.

Mr. Peterson then posed the question, “How do we build on our past impact and have a stronger impact in the future, and how do we solve problems to help our region persevere through the recession?” He discussed how Bridgeway Capital plans to respond – with new, targeted initiatives to increase capital and opportunities for small businesses and organizations.

First, Bridgeway Capital will reach out to more microloan borrowers through an online loan application process, part of a collaboration with Accion Texas, to increase lending to entrepreneurs.

Next, the company will increase financing options for nonprofit organizations. The recession and restricted credit environment has challenged nonprofits as much as small businesses. In the past, Bridgeway Capital financed a few nonprofits a year. Through the Beyond Bricks and Mortar program with funding from the Richard King Mellon Foundation, Bridgeway Capital works with nonprofits to address real estate issues that threaten the pursuit of their mission. Pete Licastro of Grant Street Associates provides professional real estate expertise often not available to nonprofits from the conventional market

This initiative led to the announcement of the 2009 Impact Award, which was given to Pete Licastro for his dedication to economic development. “The impact of this program would not be possible without the skill and commitment of Pete Licastro,” said Mr. Peterson. “His long-term perspective fits well with the nonprofit process…and he is very deserving of this award.”

The 2009 failure of state government to approve a budget was a large threat to social services agencies. Some social service agencies had to close their doors, and others turned people away. Some small child care providers were so desperate that they asked parents to bring in peanut butter and toilet paper. To respond, Bridgeway Capital created an emergency loan program. The Forbes Fund and the Pittsburgh Association for the Education of Young Children helped to create short-term, low cost loans of $3,000 to $7,000 to be repaid when the state budget passed. A video highlighting two childcare providers showcased this need and how the loan impacted the businesses. When the budget passed, 14 childcare providers had received loans and are now paying them back.

Lastly, Mr. Peterson discussed a targeted initiative to reach out and spread the word about Bridgeway Capital’s financing. A strategic marketing plan will attract new referral sources and partnerships, informative breakfast seminars will be conducted in various counties, and the website will be redesigned to provide more targeted content and highlighted impact.

The meeting closed with a reminder that working together – via loan referrals, staying connected with the latest news, and spreading the word – will help provide more opportunities for small businesses and lead to growth for western Pennsylvania’s economy.

“We are ready for another year of growing loan volume and we will ensure that we have the capacity to respond,” said Mr. Peterson. “We will continue our rigorous underwriting and focus on effective management of our assets. With your help, we can achieve our mission of a western Pennsylvania that thrives for all.”