Mayor Sharon Weston Broome’s administration is putting together a program to help make it easier for very small and minority-owned businesses to access capital.
As envisioned, the program will provide microgrants and lines of credit to disadvantaged business enterprises, or DBEs, and other very small businesses. It will be funded primarily by contributions from the business community.
Investar Bank has pledged $100,000 to seed the program, says Investar President and CEO John D’Angelo, who hopes his peers will follow suit.
“We wanted to get this started and set the standard,” D’Angelo says. “If you’re a bigger bank, maybe you should be contributing more and if you’re smaller you can do less. We all need to work towards developing a pool that can give money away in a smart way.”
The idea for the program and Investar’s offer of support came out of Broome’s Restart BR Committee, which has been meeting virtually in the weeks since the COVID shutdown to focus on helping the economy and small business community recover.
Over the past two weeks, the need for such a program has been underscored even more dramatically, as protests over the death of George Floyd have raised awareness about systemic inequality in the country.
Black-owned businesses in particular have long spoken of challenges they face accessing capital from traditional lending institutions. D’Angelo and others say the issue is complex and solving it will require a comprehensive, communitywide approach involving education and outreach. But a grant program is a good first step.
“A lot of low- to moderate-income businesses have no relationship with a bank and don’t really know where to start,” he says. “In some cases, it’s a lack of sophistication about how to put the application together or they had a bad experience once and never went back. This is a way to help get them back in the system and to do so without burdening them with a lot of debt.”
CPAs and other business leaders also have a role to play in providing assistance, training and financial literacy education, D’Angelo says.
“Everybody wants to point to the banks but what about getting help with CPAs and other advisers who could help them put their loan packages together,” he says.
Veneeth Iyengar, Broome’s assistant chief administration officer, has been working with D’Angelo and others on the Restart BR Committee and says there is support for the grant program.
“We’re coming up with the structure, the partners, the dollar amounts,” he says. “It will be significantly more than $100,000 by the time all is said and done.”
He hopes program details will be finalized within the next two weeks.
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