Reform the SBA

01/11/2023

Can the SBA be doing more for small businesses? Here’s what we think.

12/21/2022

Federal efforts to lift underserved and rural economies have largely failed says a coalition of business organizations. Read comments the coalition submitted to a Request for Information from the Interagency Community Investment Committee.

For Immediate Release Contact: Frank Knapp 803-600-6874 [email protected] Business coalition criticizes fed agencies on capital access efforts in underserved communities December 13, 2022—Federal efforts to lift underserved and rural economies have largely failed says a coalition of business organi...

05/20/2022

FOR IMMEDIATE RELEASE: Survey of 2,500+ Diverse Small Business Owners Shows an Unexpected $5,000 Expense Could Jeopardize Nearly Half of Small Businesses

A new national survey shows small business owners, particularly entrepreneurs of color, lack confidence they can fund an unplanned $5,000 business expense or access basic financing to take advantage of growth opportunities. Business owners also lack awareness of financing options available to them; survey also points to high trust in the Small Business Administration, which could help provide solutions

WASHINGTON, D.C., May 19, 2022 — A new national survey of more than 2,500 diverse businesses released today shows nearly half of small business owners, and more small business owners of color, lack confidence in their ability to fund an unplanned $5,000 business expense. Additionally, the survey released by Reimagine Main Street — a project of the Public Private Strategies Institute in partnership with the National Asian/Pacific Islander American Chamber of Commerce and Entrepreneurship, the U.S. Black Chambers, Inc., and the United States Hispanic Chamber of Commerce — shows that Main Street entrepreneurs, especially those of color, lack confidence in their ability to finance growth opportunities such as a marketing campaign, a purchase order or contract, or to get a volume discount on an inventory purchase.

At the same time, the survey finds a strong level of small business trust in the Small Business Administration (SBA), bucking the trend of waning trust in government institutions and pointing to public-private partnerships with the SBA as a potential solution to help Main Street.

The organizations will host a virtual roundtable, “Trust and Access to Capital,” at 1pm ET today convening small business leaders, advocates, and policymakers to discuss the survey findings and the implications and opportunities they illuminate for expanding capital access.

Specific survey results include:

45% of respondents lack confidence to fund an unplanned $5,000 business expense.

More AAPI, Black, and Latino/a entrepreneurs do not think they could fund an unexpected $5,000 than believe they could.

Most respondents lack confidence that they could find funds for regular business expenses that lead to growth, such as a marketing campaign, a new hire, or to purchase property or equipment.

Most entrepreneurs of color lack confidence they could finance a purchase order or contract or get a volume discount on an inventory purchase.

76% of Black, Latino/a, and White respondents report trust in the SBA, while 81% of AAPI respondents report trust in the SBA.

Nearly half of respondents do not know about Community Development Financial Institutions (CDFIs) or Minority Depository Institutions (MDIs) and 41% of respondents are not familiar with FinTech lenders.

79% of respondents applied for a loan or other form of credit in the last 12 months. Of those who did, 83% were seeking less than $250,000 and 69% applied for less than $100,000. ·

“While the Covid-19 pandemic may be receding, it’s clear the economic impact it had on small businesses across the country has its own long tail,” said Tammy Halevy, Executive Director of Reimagine Main Street. “Small business owners continue to struggle with inflation, tight labor markets, and supply chain disruptions, and it's crucial we equip Main Street entrepreneurs with the resources needed to build a more equitable small business economy. Now is the time to explore new solutions and co-investment from the private and public sectors.”

“Growth opportunities that require funding are too frequently deemed out of reach, particularly for entrepreneurs of color – which has a chilling effect on AAPI communities and economic growth,” said Chiling Tong, President and CEO, National Asian/Pacific Islander American Chamber of Commerce and Entrepreneurship. “In order to rebuild from the economic fallout of Covid-19, we have to ensure entrepreneurs of color have the funding they need to grow and thrive.”

“This survey highlights a tremendous problem in our economy, which is that Black business owners are disproportionately unable to meet their financing needs,” said Ron Busby, President and CEO, U.S. Black Chambers, Inc. “If we want to reverse this trend and build a stronger and more prosperous small business economy, we have to address access to capital.”

“Equitable small business financing is the key to rebuilding from the pandemic,” said Ramiro A. Cavazos, President & CEO of the United States Hispanic Chamber of Commerce. “It’s time to start looking for creative solutions that can help us build a fairer financing system and enable entrepreneurs of color to thrive.”

“Access to capital remains a stubborn problem for small business owners, especially small business owners of color, that will hamper our country’s success unless we do something about it,” said Rhett Buttle, President of the Public Private Strategies Institute. “Fortunately, this survey also points to opportunities for the private sector and our government to work together to help create solutions to help us grow a more equitable economy.”

View the full survey findings here: https://www.reimaginemainstreet.org/trust-and-access-to-capitals

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About Reimagine Main Street
Small businesses and their workers must rebound from the COVID-19 crisis so that communities thrive and the benefits ripple throughout the economy. We are a multi-stakeholder, cross-sector initiative focused on advancing and uplifting innovative solutions to ensure that Main Street is at the center of our recovery. Reimagine Main Street is a project of Public Private Strategies.

About Public Private Strategies Institute
The Public Private Strategies Institute (PPSI) is an independent research and education organization. PPSI engages in educational activities concerning the public and private sectors’ roles in advancing societal change. PPSI explores best practices and trends through research, publications, and educational events. Additionally, it produces educational and informational content that will educate public and private sector actors about their capacity to be agents of social change; and conduct research into the existing landscape of public and private social responsibility and the potential for the future.

Read the full press release here: https://reformthesba.com/survey-of-2500-diverse-small-business-owners-shows-an-unexpected-5000-expense-could-jeopardize-nearly-half-of-small-businesses/

  FOR IMMEDIATE RELEASE Media ContactConan Knoll(831) 524-6764 [email protected] Survey of 2,500+ Diverse Small Business Owners Shows an Unexpected $5,000 Expense Could Jeopardize Nearly Half of Small Businesses A new national survey shows small business owners, particularly entrepreneurs...

04/05/2022

Small businesses in need of a loan find banks are stingy.

NEW YORK — Small businesses still have the pandemic and now high inflation to grapple with — and they’re finding it’s tough to get a loan to help with the daily grind.

A recently released survey from the Federal Reserve shows how the pandemic has altered the financial landscape for small business. About 85% experienced financial difficulties in 2021, up nearly 20 percentage points from 2019. Back then, more than half of owners who sought a loan were looking to expand; last year, the majority of applicants needed funds just to cover every day operating expenses.

Meanwhile, inflation is the highest in decades, with raw materials and finished goods soaring in price and workers demanding higher wages. The Federal Reserve is raising interest rates in response, which means the cost of borrowing money is going up.

Read more:

Many small businesses are finding it tough to get a bank loan, making it difficult to move beyond the pandemic and afford the higher costs of goods and labor

03/22/2022

How Philadelphia is laying the groundwork for a public bank.

Philadelphia is inching closer to becoming the first U.S. municipality to operate a public bank.

In the latest step forward for a nationwide movement that has been gaining steam, the Philadelphia City Council voted on March 3 to establish a public financial authority — a move that supporters see as a precursor to chartering a public bank that would eventually serve as a depository for municipal funds.

Read more:

“The interim authority won’t take deposits, instead focusing on providing credit enhancements and loan guarantees in partnership with private-sector banks and credit unions. The credit enhancements and loan guarantees will benefit women-owned and minority-owned small business owners and entrepre...

03/22/2022

New Economic Justice Loans Set New Standards for Minority Business Lending

Former U.S. Comptroller of the Currency and current LISEP Chair Gene Ludwig and NACA CEO Bruce Marks today announced a groundbreaking lending program for minority-owned businesses. Economic Justice Loans will be a model for financial institutions, financial regulators, and the government to address economic inequality created by a long-term inability to access capital with favorable terms. This program will offer fixed, low-interest loans to people lacking wealth and high credit scores, and who have been subject to systematic racism.

Read more:

/PRNewswire/ -- Former U.S. Comptroller of the Currency and current LISEP Chair Gene Ludwig and NACA CEO Bruce Marks today announced a groundbreaking lending...

03/11/2022

Small Business Struggles Continue Amid Economic Uncertainty

Two years into the pandemic, more than half of small businesses report being in fair or poor financial condition according to a meta-analysis performed by SCORE, mentors to America’s small businesses and a resource partner of the U.S. Small Business Administration.

Most small businesses have not applied for loans, even though 54% of entrepreneurs who didn’t apply for loans needed funds. Of the small business owners who did apply for outside financing, 63% used those funds to meet basic needs such as wages, rent and inventory costs, rather than to grow their company.

When loans were granted, small businesses struggled to receive the full financing they needed. Even among small businesses with low credit risk, only 38% received the financing they sought, compared to 62% at pre-pandemic levels.

Two years into the pandemic, more than half of small businesses report being in fair or poor financial condition according to a meta-analysis performed by SCORE, mentors to America's small businesses and a resource partner of the U.S. Small Business Administration.

03/01/2022

Joint Economic Committee and Congressional Black Caucus Release New Report on State of Black Entrepreneurship

In recognition of Black History Month and in celebration of the 50th anniversary of the Congressional Black Caucus (CBC), the Joint Economic Committee (JEC) and the CBC released a new report on the state of Black entrepreneurship and policies that would eliminate barriers to Black business formation to promote stronger and more inclusive economic growth.

As the new report, titled “Building an Economy that Embraces and Empowers Black Entrepreneurship,” makes clear, Black entrepreneurs and small businesses are integral to the overall strength of the U.S. economy. Yet pervasive racial gaps in business ownership, opportunity and wealth restrain the economic potential of the United States.

Read more:

“Among businesses with good credit scores, Black-owned firms are half as likely as white-owned firms to receive all of the financing they apply for.” Press Release February 28, 2022 Washington, DC—In recognition of Black History Month and in celebration of the 50th anniversary of the Congressi...

01/02/2022

Lending on Character, Not Credit Scores
Conventional banking hasn’t worked for businesses owned by people of color. But a new network is designed to get money flowing fairly to BIPOC economies.
Read more:

Conventional banking hasn't worked for businesses owned by people of color. But a new network is designed to get money flowing fairly to BIPOC economies.

12/22/2021

Manchin Said No to Build Back Better. How That'll Ripple Through SBA-Backed Lending
Biden's social spending bill would have allowed the Small Business Administration to dive into direct lending. Here are two other options in its absence.

Biden's social spending bill would have allowed the Small Business Administration to dive into direct lending. Here are two other options in its absence.

11/06/2021

Narrower SBA direct lending plan fails to appease banks, credit unions—American Banker, November 2, 2021. By John Resosti

…The SBA “has been relying on third parties to make the lending decisions on 7(a) and those third parties are opting not to make small loans, especially in rural and underserved communities,” Frank Knapp, president and CEO of the South Carolina Small Business Chamber of Commerce, said. “That does not accrue to the benefit of the smallest businesses.”

…“My gut reaction was that SBA has no business doing direct lending,” Nimi Natan, president and CEO of Gulf Coast Small Business Lending said. “Then I had a chance to reflect and I realized the SBA is trying to serve people we don’t get to."

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“My gut reaction was that SBA has no business doing direct lending,” Nimi Natan, president and CEO of Gulf Coast Small Business Lending said. “Then I had a chance to reflect and I realized the SBA is trying to serve people we don’t get to.” American Banker November 2, 2021…

11/01/2021

Racial quotas attack the symptom, not the problem—which is why it’s necessary to create a culture of entrepreneurship in the Black community.
This can be done in poor urban centers, and in equally poor rural areas, by continuing to expand the scope and resources of the Small Business Administration.
Ensure they have the resources to offer government-backed loans to those who take financial literacy classes. And offer real guidance from beginning to end for anyone who wants to have a business or buy a house.

The Community Reinvestment Act was an ambitious attempt at solving problems faced by minorities whose loans had been denied at an alarming rate. But simply creating a government mandate didn’t