The recession is triggering more loan demand at the Community First Fund.

And an initiative triggered by the recession might help the organization meet it.

The Community First Fund hopes to get $2 million in economic stimulus funds to supplement its pool of available loan dollars.

The new money would come from the $200 million that the stimulus package earmarked for community-development groups nationwide.

The dollars are available via the U.S. Treasury's Community Development Financial Institutions Fund, which the Community First Fund has tapped since 1998.

"It's competitive. We're not guaranteed to be approved," said Daniel Betancourt, Community First Fund president and chief executive officer.

"But we have a good track record of getting major dollars from this program," he said Thursday.

The Community First Fund has received $3.7 million over the years through the U.S. Treasury program.

Applications for the new federal dollars are due by late May. Approvals are expected in August.

Betancourt said the Community First Fund is seeking the additional dollars because it projects another hefty increase in loan demand in its fiscal year starting in July.

The Community First Fund anticipates loaning $9 million in the next fiscal year to its client mix of entrepreneurs, developers of affordable housing and non-profits with social-service initiatives.

"The need just continues to increase," said Betancourt, citing several recession-driven factors that are creating a new wave of borrowers.

Some are recently laidoff workers who want to launch new careers as entrepreneurs.

Some have been turned down by banks that are tightening their lending criteria or have little money available to loan.

By using the U.S. Treasury program and by raising money from other sources, the Community First Fund expects to have money available to meet the surge in demand.

"We're trying to stay ahead of the curve...," said Betancourt. "This will allow us to serve all of our clients who qualify and have a need."

Betancourt envisions turning some of the federal dollars directly into loans for clients and keeping the rest as capital, strengthening the Community First Fund's balance sheet.

The Community First Fund, which was the subject of a lengthy feature article Wednesday in USA Today, has $13 million in outstanding loans in 13 counties of central Pennsylvania and the Lehigh Valley.

Staff writer Tim Mekeel can be reached at tmekeel@LNPnews.com or 481-6030.