To hear African American small business owners talk about access to capital in 2011, one could get the impression that not much has changed in modern times. Capital access historically has been blocked for minority business owners due to credit challenges
To hear African American small business owners talk about access to capital in 2011, one could get the impression that not much has changed in modern times. Capital access historically has been blocked for minority business owners due to credit challenges, inability to collateralize loans, lack of successful business networks and supports, and in some cases discriminatory lending policies.
A key barrier to capital for minority business owners today is a lack of awareness. The Obama administration has pumped billions of dollars into small business lending programs through the American Reinvestment and Recovery Act, including a small loans initiative and the formation of a council led by Radio One’s Cathy Hughes focused on lending to underserved communities. What I have learned is that a lot of African American business owners do not see themselves as the intended recipients of government lending programs. Many do not even bother to apply, because they are afraid of rejection. And that’s a shame. Taking history into account, one can understand their trepidation.
It’s time for a paradigm shift, and that is precisely what makes Goldman Sach’s 10,000 Small Businesses right on time. The investment banker is funding a $500 million national initiative to spur small business growth and job creation by providing entrepreneurs with a practical business education, access to capital and business support services. It is one of the finest examples yet of how the private sector can step up to bridge the economic gaps plaguing minority businesses in underserved communities for the greater good of the recovery.
The investment firm recently brought 10,000 Small Businesses to Chicago, thanks to the efforts of Mayor Rahm Emanuel, City Colleges of Chicago Chancellor Cheryl Hyman, and business and industry partners including the Chicagoland Chamber of Commerce, the Women’s Business Development Center, the Illinois Hispanic Chamber of Commerce and the Chicago Urban League. Goldman Sachs will invest $25 million in small business growth and education in Chicago over a five-year period. Of that, $20 million will be earmarked for small business loans to be administered through local Community Development Financial Institutions, or CDFIs. The remaining $5 million will pay for education and training courses for entrepreneurs at Harold Washington College.
The initiative is currently only available in a handful of cities. Goldman Sachs chose Chicago because of its history of entrepreneurship and the burgeoning number of small businesses, estimated at 100,000 in the city proper. These businesses are important because they account for nearly 70 percent of Chicago’s employment numbers.
The Chicago Urban League will promote the initiative through our Entrepreneurship Center and help identify potential candidates. 10,000 Small Businesses is smart on many levels. Like our nextONE business accelerator program, 10,000 Small Businesses understands that small businesses need education and capital to grow. It brings all the key players to the table: government, academia, business and industry, and nonprofits.
Eligible businesses include, but are not limited to, those with between $150,000 and $4 million in annual revenues; with at least four employees; and in business for two years.
So, it casts a wide net to capture the largest subset of small businesses in America.
Still don’t think see your business as potentially one of the 10,000? To date, 40 percent of the 350 businesses participating in the initiative nationwide are minority-owned. If you don’t believe me, read for yourself. Google “10,000 Small Businesses” and go to the Web site for profiles on entrepreneurs in cities such as Houston, Long Beach, Calif., and New York who have benefitted from the program. I think you will find that the small businesses there look a lot like the ones in your community: Mom and pop retailers; family-owned manufacturing and textiles companies; and restaurants and coffee houses.
In addition, Mayor Emanuel has spearheaded the Promote Innovation and Entrepreneurship Initiative here locally to make it faster and easier to get business licenses and permits to ease the administrative burden on entrepreneurs looking to expand.
If small businesses are indeed the lynchpin of the recovery, as we have been told, then supporting them is critical to rebuilding the nation’s economy. But there is no silver bullet. The government has invested money into small businesses, but not enough of those funds have come to the African American community.
At the Chicago Urban League, we know that government can and will only do so much.
A sustainable recovery will require investment and public-private partners willing to put skin in the game. I encourage all entrepreneurs who are interested to consider the Goldman Sachs 10,000 Small Businesses program.
To apply, go to http://ccc10ksb.wordpress.com/home-2/.
Andrea L. Zopp is President and CEO of the Chicago Urban League.