Neighborhood National Bank has a niche midway between a micro-lender such as Acción San Diego and a large commercial bank, says Bob McGill, chairman and chief executive. The 7-year-old community development bank is headquartered on National Avenue in San Diego and has a second branch in National City.

Acción has a complementary role with banks, says McGill, because the micro-lender can provide funding for a business that is just starting out, allowing it to create a track record that it can use to secure a loan at a smaller bank, and then move on to a larger bank.

McGill calls the concept “laddering,” and says, “If you’re missing a step on the ladder it is very difficult for people to make their way up as they achieve success.”

Neighborhood National Bank targets underserved communities that don’t typically have access to traditional banks due to factors such as language barriers. While very small loans are not cost-effective because of the required paperwork for a regulated bank, McGill says, his bank focuses on mid-range loans averaging $250,000.

The bank offers SBA loans and other types of loans depending on its customers’ needs, McGill says. One loan program is targeted at low-income census tracts and is designed to beat the market rate. Capital for this program comes from a special tax credit and the proceeds must be used primarily in low-income communities, McGill says.

“There has proven to be a market opportunity,” he says, and his bank has found that low- and moderate-income business owners have a very good repayment rate. Neighborhood National Bank will soon be appointing an executive to sit on Acción San Diego’s board to replace an executive who recently left.