Impact of the microbusiness world explored at forum
The Philadelphia Tribune, 8/2/16
Amid the backdrop of the Democratic National Convention, the Association for Enterprise Opportunity and the financial management firm Dun & Bradstreet conducted a forum on the state of microbusiness and microfinance in the United States.
AEO leader Connie Evans said that microbusinesses, those that employ five people or less, comprise more than 90 percent of all businesses in the United States and employ nearly 41 million people.
“Their impact is really bigger than all of us think,” Evans said. “That’s why we are holding this forum because we want to raise the visibility and the awareness of the vital contributions that these businesses make.”
The session comes at a time when the nation’s smallest businesses are facing a $52 billion capital gap, according to the AEO.
At the event, U.S. Rep. Nydia Velázquez (D-N.Y.), ranking member of the House Small Business Committee, highlighted the importance of securing access to capital for microbusiness operators.
“Microbusinesses could provide the stability that we need in terms of creating jobs in for an economy that is still struggling,” Velázquez said. “As a small business owner, nothing is more important than getting an opportunity to get your first loan and to turn your dreams into reality.
“Unfortunately, minority and women-owned businesses are too often left out of the discussion when we talk about economic policy and many continue to face discrimination in lending markets,” she added.
The lawmaker said the U.S. Small Business Administration microloan program was a win-win for the federal government and business owners, as it provides approved lenders up to $50,000 to help businesses owners seeking small loans.
Latasha Sampson, the owner of Chocolate City Hair Studio and Day Spa, spoke about how she benefited from receiving funding from local microlenders. Her Southwest Philadelphia-based salon currently has 11 employees.
“I was given the opportunity to purchase my own business,” said Sampson, 44. “I never wanted to own a hair salon. My passion was just doing hair but the opportunity was presented to me, so I took it.”
Sixteen years ago, Sampson approached Entrepreneur Works, an organization that opens opportunities for talented entrepreneurs, for assistance after she was turned down for a traditional bank loan. At the time, she had exhausted all her personal funds and had bad personal credit, she acknowledged.
Sampson would ultimately receive a $25,000 loan from Entrepreneur Works to move her salon to a new location in Southwest Philadelphia. She has since paid off that loan, and recently received a $5,000 loan from Kiva Philadelphia to brand and market her new hair extension line.
Kiva Philadelphia is a partnership between Kiva and the Philadelphia Department of Commerce that crowdfunds zero-interest microloans for small business owners and entrepreneurs in the region. Alyssa Thomas, manager of Kiva Philadelphia said since the program’s launch they have funded about $450,000 in loans to 93 business owners.
Sampson appreciates the personalized experience of receiving business funding from microlenders compared to dealing with traditional bankers. She says it is important for entrepreneurs to know that micro lending programs are out there for small business owners.
City Councilman Derek Green said one of the ways to address poverty was growing small businesses. He acknowledged that some small businesses were affected by the lack of access to credit.
“It’s that lack of access to credit that impacts poverty,” Green said. “One of things that we are trying to do here in the city of Philadelphia is to put together a public-private partnership to address that lack of access to credit.
“What we are trying to do is to create a lending tree type of initiative where we have a uniform application that allows small businesses to get access to credit,” he added. “The Commerce Department will match that with CDFIs [Community Development Financial Institutions), lenders and other institutions to get them access to credit,” he said.
During the forum, Jane Campbell, the former mayor of Cleveland, Ohio, and the director of the Washington office for the National Development Council, laid out AEO’s public policy platform highlighting to close the multibillion capital gap for microbusinesses.
The organization encourages investments that offer alternative pools of capital within the Community Development Financial Institution for women and minority entrepreneurs. It also seeks to ensure transparency in lending and modernizing the credit rating system.