When the Northeast Sustainable Energy Association (NESEA) needed short-term funding to cover its expenses, Massachusetts member Greenfield Savings Bank tapped the Federal Home Loan Bank of Boston's Community Development advances.

In recent years, the nonprofit NESEA had played a key role in helping revitalize downtown Greenfield by opening Energy Park on land where the town's train station once stood. Energy Park offers exhibits on alternative forms of sustainable energy, including solar and wind power.

"This area has revitalized the heart of downtown," says Sandra F. Thomas, director of NESEA's Energy Park. "It was really a blighted, underutilized area, but now it's really become a focal piece for the community. Several business owners say they established their businesses close to here because of the park."

In addition to making the short-term loan to NESEA using a Community Development advance, Greenfield Savings Bank donated money for the development of Energy Park and has offered a challenge grant of $25,000 for a performing-arts pavilion planned for the park.

Providing funding for nonprofits and small businesses is a key component of Greenfield Savings Bank's strategy to reach every segment of the community. A major player in Franklin County with over 40 percent of county deposits, Greenfield Savings Bank recently expanded into Hampshire County with the opening of a branch in Amherst.

Founded in 1869, the Greenfield Savings Bank has deep roots in the community, unique in an era when many local banks are no longer locally controlled. Given its high-profile position in county affairs, the bank has become a major source of support and funding for many local projects.

A Source of Discounted Funding
In carrying out its community mission, Greenfield Savings Bank has often turned to the Bank's Community Development advances for a key source of funding. Community Development advances provide discounted financing for small businesses, affordable housing, local public-works projects, and other initiatives benefiting low- to moderate- income families and neighborhoods.

"There are challenges to lending to nonprofits or marginally profitable small businesses in the area," says Joseph A. Poirier, president of Greenfield Savings Bank. "You want to do it, but on the other hand, you want to produce a good return. This is why the Community Development advance works for us."

Mr. Poirier says Community Development advances are especially useful in funding organizations with unpredictable revenue streams.

"Community Development advances provide us with a little lower cost of funds so that we're able to provide financing to these organizations, virtually at market rates," notes Mr. Poirier. "Normally you might want to charge more to reflect the risks in underwriting the deal. [With a Community Development advance], you might be able to save borrowers a half-point on their rate because your cost of funds is a little lower."

Ease of use and a fast learning curve also make Community Development advances an attractive source of funding for Greenfield Savings Bank, adds Thomas R. Graham, the member's compliance and CRA officer. Over the last two years, Greenfield Savings Bank has been approved for almost $9?million in Community Development advances.

Mr. Graham says his institution has used the advances to finance a broad range of housing and commercial initiatives in income-eligible neighborhoods, including affordable multifamily housing, a bicycle shop, and a food cooperative — the kind of small, locally owned businesses that are a key component of the county's economy. The member has also used the advances to provide mortgage financing for moderate-income households.

In an earlier era, the Franklin County economy centered on agriculture and large manufacturers such as Millers Falls Paper, Millers Falls Tool Company, and Greenfield Tap and Die. But many of these manufacturers closed or relocated, leaving residents to rely on smaller companies and businesses for jobs.

"We get dislocated workers who may want to start a landscaping business or a painting business," says Mr. Poirier. "They often come to us for financing to get them off the ground."

With smaller businesses playing an increasingly important role in the local economy, Greenfield Savings Bank has often turned to Community Development advances for low-cost funding to stabilize the town's downtown business district.

John Eichholz, Green Fields Market's general manager, believes that the presence of an "understanding lender" in the community has done much to stabilize the business district.

"They have always respected us as one of the downtown businesses," says Mr. Eichholz. "And, for me, that's a great feeling. They really want us to succeed. It feels like they're on our side."

Another downtown business that has benefited from a Community Development advance is Bicycle World, a bicycle sales and repair shop opened by Chris Ethier in 1970.

Although Mr. Ethier has weathered economic downturns and challenges from competitors over the last 30 years, he overextended himself a few years ago and needed an infusion of capital to stabilize his business.

"I did an expansion that failed, and I found myself with excess inventory and excess debt," says Mr. Ethier. "I sold off as much as I could, as quickly as I could, but I also had to pay down the debt while still continuing in business."

"The loan was extremely well done for me," adds Mr. Ethier. "They went out of their way to write it to a system that fit into my cash flow."

Community Leadership
Mr. Ethier attributes Greenfield Savings Bank's current success in part to the skills of Mr. Poirier, who has invested much effort in recent years in expanding the member's profile in the community. "I think Joe's personality drives the bank," says Mr. Ethier. "When you go in there and you see him with people, he's always up, always friendly and happy. I think that just permeates that bank."

Last year, the Massachusetts Association of Community Development Corporations recognized Greenfield Savings Bank's community work with its Funder/Lender Award.

"I think it's great that they're being recognized," says John Waite, executive director of the Franklin County Community Development Corporation, which nominated the member for the award. "They're not that big of a bank — this being a smaller area — but they're really important out here. I don't know how long they've been around, but they're strong and we hope to keep them around for a long time."

For more information on Community Development advances, visit the Housing & Economic Growth section or contact the Housing and Community Investment Department, at 1-888-424-3863 or housing@fhlbboston.com.