Forza Financial issues first loan

Briana Harris

A Tuscaloosa businesswoman grew closer to re-establishing her hair salon this week after it was destroyed in the April 27 tornadoes.

Katrina Rollins left her salon and escaped to safety just minutes before the catastrophic EF-4 tornado destroyed the salon she had owned for more than 25 years.

Without the ability to rebuild in her previous location, and hungry to get back in business, Rollins built an addition onto her home to serve as the new location for her salon. However, the building did not meet city codes and could not serve as her place of business.

Getting back to the business she loved was proving to be a difficult task, but the process is looking like it will be made easier because Forza Financial stepped in to help last week.

Forza Financial, a nonprofit, student-run microlender that partners with the University of Alabama to provide small loans between $500 and $5,000 to Tuscaloosa entrepreneurs, awarded Rollins with a $3,500 loan to assist her in bringing her building up to city code requirements.

This comes as a huge help to Rollins, who said that after last April’s storms and the destruction they caused, she was too discouraged to seek help.

“Now I’m better,” Rollins said. “This loan will help me get back on my feet.”

David Bailey, a UA junior and CEO of Forza Financial, said the target clientele for the company includes entrepreneurs that earn below 50 percent of the United States’ average median income.

“Our loans don’t require a credit score or credit history, and they don’t require collateral,” he said. “What we are trying to do is serve a demographic that has a need for financing and loans but don’t have access to those loans.”

Shane Shape, dean of the Honors College and advisor to Forza Financial, said that this organization is exactly the type of opportunity he wanted to create for the Tuscaloosa community and students at the University.

“While serving the citizens of Tuscaloosa, we are able to provide our students with an invaluable educational experience,” he said.

The students at Forza also receive class credit for the work they are doing, Sharpe said.

“We are one of a handful of educational institutions that have the ability to do this,” Sharpe said. “I am also very pleased with how the University has facilitated the start-up of this organization. Our administration was really behind the creation of this opportunity.”

Along with the enterprising entrepreneurs, another target demographic for Forza Financial is college students, Bailey said.

“We didn’t think about students as being possible clients when we first started, but if you think about it, students are also the perfect demographic,” he said. “Students have no collateral, no credit history, no job security and lenders see us as being totally unreliable.”

However, Bailey said that students would make ideal borrowers for Forza Financial because they usually have ideas that require a reasonable amount of money to get started. Forza Financial is actively looking for students who are serious about starting a business in Tuscaloosa, even if it is a small business.

The interest rate at Forza Financial ranges from 10 to 20 percent, which is a little higher than the average rate from a bank would be, but it is still lower than the interest rates of a credit card or payday loan companies, Bailey said.

Receiving grants in order to run the business is also something that the students at Forza Financial work toward.

Students at Forza Financial go to a wide range of educational nonprofit organizations, such as the Alabama Entrepreneurial Research Network, the Center for Community-Based Partnerships, the Student Government Association and the Honors College, to aid them in raising the money necessary to sustain their organization, Bailey said.

For the financial lending side of the equation, Forza Financial has partnered with The Intersect Fund, which is a nonprofit organization based in New Jersey that offers financial help to low income entrepreneurs. Micro-finance investors and other finance companies also contribute to the capital needed for Forza Financial to write loans.

“Our sole goal is to write as many loans to qualified borrowers as we can,” Bailey said. “We are really invested in our borrowers, and we want them to succeed.”

Louis Marino, professor of entrepreneurship at Alabama and advisor to Forza Financial, said he believes Forza Financial has the potential to spread to many colleges in the southeast in the next three years and throughout the U.S. in five.

“I have seen the power and the impact that this could have,” he said. “It has the potential to be nationwide, which would be very exciting and a great accomplishment for our students.”

Last fall, a group of the organization’s students traveled to Yale University to deliver a presentation about Forza Financial and its goals. Additionally, other colleges have contacted the organization inquiring about how they can implement a similar program at their university.

“Another goal of ours is to grow our services outside of Tuscaloosa,” Bailey said. “We think that we can branch our company to other colleges in Alabama, such as the University of Alabama at Birmingham and the University of Alabama at Huntsville.”

Forza Financial’s plan is to accumulate at least 100 borrowers and develop a portfolio, so the organization can pitch the idea of micro-lending to a prominent bank.

“Micro-lending is an undeveloped industry in the U.S., and we want to prove that it works by getting a bank to offer micro-financing as an option to their customers,” Bailey said. “To get there, we need to prove that this can be sustainable. If we can get banks to get on board with this, it could turn into a sort of entrepreneurial renaissance. ”