Access to capital a problem for minority entrepreneurs
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- Published on Monday, 15 February 2016 16:57
- Written by Paul Gordon
Small and minority owned businesses have difficulty getting access to federal and state startup funding, a small group told there local congresswoman during a roundtable discussion Monday in Peoria.
A half dozen minority business owners told U.S. Rep. Cheri Bustos, D-East Moline, that if it had not been for family help or putting their homes up as collateral for startup loans, their businesses probably would not be operating today. That’s largely because the paperwork and red tape involved with getting a small business loan is often prohibitive, they said.
“It sounds great to hear how much money is available but if I don’t have access to it, what good does it do me? If there is so much red tape involved that it takes a year to get the loan, is that really access,” questioned Barry Draper, founder of a technology business that is just getting off the ground called Connectivity Resources.
The discussion was at Carver Community Center and is one of three Bustos intends to have throughout her 17th District this week. Bustos told the group she wanted to hear the concerns of small business owners and, in honor of Black History Month, from minority business owners in particular.
“I know access to capital is an issue,” Bustos said, noting it is becoming more of a problem for minority owners. Since 2008, she said, the amount of federal small business loans going to minority businesses has dwindled from 8 percent of all loans to 2 percent.
“We need to find out why,” she added. “We will figure out how to address this.”
Draper was one of six business owners in attendance and he talked of having to put his home up as collateral to start his company, which assembles components for the technology industry. That was despite having years of experience in the industry working for others and having a business plan in hand, one that included helping put laid-off local workers back to work.
The reason he started his business, he said, was because he saw how much assembly work his former employer was sending to Mexico, work he knew could be done here.
Andre McKnight, who owns a company that subcontracts with builders to clean and prepare new structures for opening, said he made sure to become certified in everything they expect subcontractors to be certified in and still has trouble even being invited to bid on projects. His company, Leis Michael Construction, has managed to survive 17 years through perseverance and getting themselves known, said he’s never gotten a business loan.
Help from friends and family got him started “along with my own strong work ethic,” he added.
His wife, Leslie McKnight, who is also an economic development specialist for the City of Peoria, said access to capital is the biggest impediment small business owners face and it is largely because they don’t have any equity starting out and that is what banks want. “There is a lot of bootstrapping going on to build the business and get equity,” she said.
Leslie McKnight said she believed one solution could be to tie small business development grants to business counseling services and aid from small business development centers to better the chances of success.
Others there talked of needing family help while not only building a business, but building a market for their business. Ronnie Lee, who with his wife owns a Segway touring business called World on Wheels, said they now have nine Segways and have had to save money and buy the units three at a time. “But at least we don’t owe anyone,” he said.
Ron Givens, owner of a construction company called GIVSCO, said it was in his mind to be a business owner since he was a teenager and learned from his father that everything happens in the world because of business.
“So I started setting goals,” he said. “Having grown up in Peoria I knew there were very few minority-owned businesses here outside of bars, churches or restaurants. I wanted more.”
Givens said he’s always been a saver and a talker and has never obtained a low interest loan. But, he said, he has been able to achieve his goals.
One thing he said helped him was finding a mentor and he recommended new and potential small business owners do that, as well.
