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Staff Photo by Matt Hamilton / From left, Paige McVity of BrightBridge, Ryan Murphy with Pinnacle, Monica Blanton with BrightBridge, Craig Holley with Pinnacle and Mike Howard with BrightBridge hold a $5 million check at BrightBridge Capital on Tuesday, April 12, 2022.

In its second major investment in a local community development financial institution in the past year, Pinnacle Bank gave $5 million to the small business lending nonprofit BrightBridge Capital to support more loans in economically underserved neighborhoods in the Chattanooga area.

BrightBridge intends to deploy the funds over the next nine months to provide market-rate or below-market-rate loans to small businesses, startups and non-profit groups working on affordable housing and economic development in low-income areas. The loans will be made to companies unable to secure conventional financing and can be used to start or grow their operations, create jobs or provide affordable housing stock.

"We realize we've got to do more to close the wealth gap by providing more resources to our small business community," Craig Holley, Chattanooga market president for Pinnacle Bank, said Tuesday after presenting an oversized $5 million check to BrightBridge leaders. "It's a sustainable source of capital to help grow our community. If you find a successful community, you most likely are going to find at its core a vibrant small business and that's what these types of partnerships help support."

Since 1981, BrightBridge has worked with startups and existing businesses to bring jobs, commercial goods and services along with low-interest loans using a variety of Small Business Administration programs and private donations and investments to low-income areas. In a statement, BrightBridge Senior Executive Bill Pollard said as a nonprofit, the bottom line for BrightBridge "is measured by the positive impact made in the communities we serve."

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Bridging the wealth gap

But BrightBridge is not a charity. By working with the clients it serves and often providing lower-cost loans, BrightBridge has been able to maintain high levels of loan repayments on its loan portfolio of more than $300 million.

"The funding provided by Pinnacle will be transformational for small businesses and entrepreneurs throughout Tennessee and Georgia," Pollard said in a statement. "We take great pride in the success stories of our clients and the impact their success has on our shared economy."

One likely recipient of the extra BrightBridge funding is City Fields, a 4-year-old community development corporation working to revitalize the Blythe Oldfield community near downtown Cleveland, Tennessee. The 700-home neighborhood was developed as a working-class community a century ago for workers at the nearby Magic Chef (later Whirlpool) appliance plant before Whirlpool ultimately relocated out of the downtown area a decade ago.

The area is one of the poorest census tracts in the region, but because it is close to Cleveland's revitalizing downtown, it offers a rich potential for working-class housing if it remains affordable.

"This partnership with BrightBridge offers us greater flexibility and will expand our ability to purchase and provide more affordable housing," Dustin Tommey, executive director of City Fields, said Tuesday in an interview. "Affordability is really hard for many people right now."

Only about 40% of the homes in Blythe Oldfield are owner-occupied, but the BrightBridge financing for City Fields should help most low- and moderate-income families be able to buy homes in the area.

Tommey said his group is working for $500,000 of loans through BrightBridge to help pay for the purchase and renovation of some of the vacant or distressed homes in Blythe Oldfield.

The agency and its predecessor working group that was a part of the Cleveland United Way have already helped upgrade the energy efficiency of 413 homes through a $4.7 million TVA Extreme Energy Makeover program and purchased, redeveloped and sold to qualified low-income homebuyers 13 homes. Another 10 are being redeveloped and Tommey said the BrightBridge funding should allow even more housing redevelopment, along with support for related support services in workforce and economic development by City Fields.

For its part, Pinnacle will gain Community Reinvestment Act credit for the $5 million loan to BrighBridge, as well as franchise and excise tax advantages that Tennessee adopted under former Gov. Phil Bredesen to encourage banks to use their capital to aid businesses in underserved areas.

Pinnacle Bank, which acquired the former CapitalMark Bank in 2015 and has grown its loan portfolio in the Chattanooga and Cleveland markets to $1.6 billion, made a similar $5 million investment last year to help attract Pathway Lending, Tennessee's biggest nonprofit community development financial institution, to reopen an office in Chattanooga last summer.

Holley said Pinnacle is primarily a business-oriented bank with only three offices in Chattanooga and one in Cleveland. But he said the bank is eager to grow small businesses and startups in all Southeast Tennessee communities to help make more bankable business opportunities as more communities thrive.

"Partnership is one of Pinnacle's values, and we know it's what helps grow and strengthen communities," Holley said.

Contact Dave Flessner at dflessner@timesfreepress.com or at 423-757-6340. Follow him on Twitter @dflessner1.

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