Scaling Without Sacrificing: Arch Grants’ New Founder Lending Program Offers Startups Another Path

Imagine founding a company and then not being able to access debt capital when it’s time to scale. Perhaps you secured a large order for your product from a major retailer, but now you need to pay the manufacturer upfront, while payments from the retailer could take months to arrive. Would you give up equity in your startup to get the funds you need? Would you relocate from St. Louis in search of a different financing opportunity? With the launch of the Founder Lending Program at Arch Grants, there’s now another option.

Over the years, Arch Grants has heard from many company founders that if they’d had more flexibility early on, they could have gone to market earlier or avoided diluting their ownership stake. The new lending program is a way for entrepreneurs that have already worked with Arch Grants in the past to access financing without giving up equity in their companies.

“We want St. Louis to be the most supportive environment for entrepreneurs and startups to get their legs to scale in the country,” Gabe Angieri, the Executive Director of Arch Grants, said. “That’s what the founding vision was for this organization, and that’s what it continues to be. This lending program is a significant enhancement to that work.”

After Arch Grants was selected for an award from JSMF to support the new loan fund, the organization connected with St. Louis Community Credit Union (SLCCU) for a conversation that quickly turned into a collaboration. Angieri called the Credit Union a “natural partner” in this work because of its unique position in the region, and Paul Woodruff, Vice President of Strategic Initiatives for SLCCU, agreed.

“We are serving both people and businesses that traditionally lack access to not only credit, but affordable credit,” Woodruff said. “If you think about the bread-and-butter of our business, it’s not just serving the St. Louis region with these resources. It’s targeting very specific capital resources to people in communities that might not otherwise be able to activate the financial dreams and aspirations that they have.”

Companies in the Arch Grants portfolio can apply for a loan and, if they meet minimum eligibility requirements, go through a traditional underwriting process with SLCCU. Arch Grants provides collateral to guarantee the loan, mitigating risk. Meanwhile, the businesses have the potential to grow and hire more workers. As the loans are repaid, guaranteed capital is unlocked, and it becomes easier for companies to secure financing in the future.

Woodruff shared that there’s a ready pipeline of businesses that need this capital. Even though the work is in a nascent stage, Woodruff felt the partnership could set the stage for other St. Louis organizations to emulate.

“This should not be the last time that you see a coordination between an organization like Arch Grants and the Credit Union. There should be other nonprofits or other incubators that are working with financial institutions to do exactly this,” Woodruff said. “What we’re doing here, it’s not only impactful for the organizations that we’re going to capitalize, that we are going to serve, that we will see grow, but it’s for the ones that are coming down the road months and years [from now] that are going be able to benefit from the work and the trust and the relationships that we’ve built through this process.”

Both Arch Grants and SLCCU are eager to see local startups succeed, and one of the requirements of the program is for companies to commit to at least one year of growth in St. Louis. This, in turn, will hopefully create more economic impact and opportunity.

“We care about the communities in our region that have been disinvested or overlooked for many years, and the priority of this program specifically is in the City of St. Louis.” Angieri said. “We want to see our companies building — from Dutchtown to downtown to Dogtown — and help them create jobs, help them reach their goals and business milestones faster and with more community backing.”