Bowie, Md. — U.S. Senator Ben Cardin (D-Md.), Ranking Member of the Senate Small Business and Entrepreneurship Committee, chaired a field hearing Monday exploring the successes and challenges of programs designed to support minority small businesses gain access to capital. Minorities make up just 22% of American businesses, despite representing more than 35% of the population. This achievement gap results in part from the significant obstacles that minority business owners face in accessing capital.
“We need to do a better job helping minority-owned businesses. Minority-owned businesses still face discrimination in the small business credit market, and still have trouble getting their fair share of government contracts,” said Cardin. “If we deny a segment of our community from reaching its full potential, we lose value and strength in our overall economy. Despite improvements, there is still work to be done to ensure that the tools we have are effective. We can’t just layer program upon program. We need to make sure we have the most efficient programs available.
“Since becoming Ranking Member of this Committee, I, along with the other members of this committee, have made it a top priority to focus on removing the barriers that still affect minority-owned small businesses. In some cases, those barriers are not unlike the barriers which plague all businesses. But, in some cases, the obstacles that minority small business owners face are very unique: Minority-owned businesses are two to three times more likely to be denied credit; more likely to avoid applying for loans based on the belief that they will be turned down; and more likely to receive smaller loans and pay higher interest rates on the loans that they do receive. If minorities owned businesses at a rate comparable to their share of the population, that would mean 2.3 million more minority-owned firms and 11.7 million more jobs.
“The recession hit all small businesses hard, but it hit minority-owned small businesses especially hard, and recovery has been uneven for different minority groups. The Small Business Administration and the Minority Business Development Agency have created various programs to improve access to capital. We will keep looking for ways to make government programs more effective, but we also have to look at the private sector. The solution is not just government-based. We need to make sure all the partners are sensitive to the needs of the small business, and especially the minority-small business, community.”
Witnesses at the field hearing included:
Alejandra Castillo, the National Director for the Minority Business Development Agency for the Department of Commerce. She is tasked with helping to create and sustain U.S. jobs by promoting the growth and global competitiveness of businesses owned and operated by minority entrepreneurs.
“This was a very important hearing that underscored many of the challenges that minority businesses face in accessing much needed capital,” said Director Castillo. “Our Agency’s mission is to champion the growth in size and scale of our Nation’s minority business community and we are unyielding in that pursuit. I’m thankful that Sen. Cardin invited MBDA to testify today and share how we are creating a critical pipeline of MBEs that are looking to grow, while also identifying a broad spectrum of capital and financing opportunities to support their business expansion.”
Antonio Doss, the Small Business Administration District Director for the Washington Metropolitan Area. He oversees the delivery of SBA’s small business financing products, contracting programs, and entrepreneurial coaching services in Washington DC, Northern Virginia, and suburban Maryland, including Bowie.
“We have made progress on underserved lending, but we know more must be done to achieve our mission,” said Director Doss. “We are taking steps to do more by making SBA loans easier to access, quicker to process, more affordable, and less cumbersome to originate. One example is in FY 2014, we made loans more affordable by waiving fees on all 7(a) loans under $150,000. As a result, minority lending under $150,000 increased 23 percent in FY 2014.”
Shelly Gross-Wade, the President and CEO of FSC First. Non-profit FSC First is a preferred alternative lender for SBA 504 Commercial Real Estate Loans, the SBA Community Advantage Loan Program, the State of Maryland Micro-Enterprise Loan Program, the City of Bowie Revolving Loan Fund, and the Prince George’s County $50 Million EDI Fund.
“I appreciated the opportunity to share ‘real world experiences’ from recent focus groups held in Prince George’s County, and more specifically to demonstrate how when technical assistance is taken advance of by minority business owners and operators it enhances their overall sustainability and ability to compete in the global marketplace,” said FSC’s Gross-Wade. “It has been our experience that minority business owners benefit exponentially when the non-traditional lender, like FSC First, can deploy innovative and creative approaches to lending capital. We insure that the terms and conditions are designed more around the borrower’s ability to repay and less on their past performance. In particular, we evaluate the lending opportunities based upon the overall economic impact that the business can achieve as a result of receiving the capital requested. Our loan proceeds can be used for any business purpose and loan amounts range from $5,000 to $5.5 Million, regardless of whether we are making a microenterprise loan, a working capital loan or a commercial real estate acquisition loan. We pride ourselves on providing a holistic approach to lending – helping to increase awareness about the plethora of business resources available to thriving minority businesses.”
Stanley Tucker, who is President and CEO of Meridian Management Group. Meridian Management Group is a professional asset manager for economic development and private equity funds. He has more than 30 years of diversified business experience, combining both lending and venture capital investing to develop socially or economically disadvantaged small businesses.
Carl Hairston, the Administrative Vice President and Regional Manager of M&T Bank’s National Capital Business and Professional Banking Group for the District of Columbia, Prince George’s County, Arlington, Alexandria, and McLean, Virginia. He oversees both the lending and servicing team that supports the branch network where he is responsible for the loan and deposit portfolios as well as the development of new business, and the Diversity Business Group responsible for developing opportunities in diverse communities.
“We remain committed to helping small businesses grow and will continue to work with organizations like the Small Business Administration, Bowie Business Innovation Center, area Chambers and a host of other organizations to provide resources and access to capital to assist business owners in reaching their goals, “ said M&T’s Hairston.