Small-business advocates try to shore up capital, services for minority entrepreneurs

Santa Cruz Sentinel

WATSONVILLE — Starting a private immigration law firm in downtown Watsonville, even for a skilled legal advocate in the federal court, would have been nearly impossible without business counseling and help with securing financing, Ariadna Renteria Torres said.

Renteria Torres opened her one-person law firm in September in Plaza Vigil, a busy business incubator supported by El Pajaro Community Development Corp.

“Once I’m shown the path, I think I can follow through. But I think you need a lot of support when you start a business, even if you know your craft,” Renteria Torres said. “I found myself to be very naive.”

Counselors at El Pajaro CDC, just one of the agencies in Santa Cruz County that provides no- or low-cost business-development training, counseling and help with financing, is hoping to keep on mission despite possible cuts that would impact services.

“We’re trying to find more resources so our clients can find a loan, but we also need resources so they receive training so they can be ready to get that loan,” said Carmen Herrera-Mansir, executive director of El Pajaro CDC. “Our clients usually don’t have collateral. Their collateral is our relationship and the training they get here. We see they’re willing to put the work into the business plan.”

For Renteria Torres and numerous other local entrepreneurs, learning the ins and outs of local resources, banks, accountants, and how to establish a business plan and priorities, especially as a relative newcomer to the community, were formidable obstacles.

“I was able to jump-start my business,” she said.

Herrera-Mansir and dozens of colleagues met last week in Oakland with Marie C. Johns, recently appointed deputy administrator of the U.S. Small Business Administration, who has been touring the country to meet with service providers in underserved communities.

“We’re seeing that underserved markets are not rebounding in terms of access to credit as much as general businesses are,” said Mark Quinn, director of the San Francisco district of the SBA, which serves Santa Cruz County. “The Recovery Act and the Jobs Act both allowed us to increase SBA lending, but we didn’t see that increase in underserved markets. The concern we have going forward is: Are we meeting our mission to help small businesses? Do we understand what we’re facing, and do we have tools in place to reach them?”

The Oakland meeting with nonprofit agencies in Northern California was an effort to “let people in Washington hear from the people in the street.”

There are signs of economic improvement, Quinn said, noting that banks report stronger borrowers and the small-business community is seeing growing revenues and demand. The recovery isn’t even, however. Stronger businesses simply recover faster.

At the Oakland meeting last week, nonprofits talked about building a community rather than just a business.

“They don’t just start businesses, they build wealth in communities through entrepreneurship in ways that only starting a business can do,” Quinn said. “El Pajaro really does it well in specialized communities of non-English-speaking and new immigrants. They said, if they don’t do it, there isn’t someone behind them who can pick it up.”

To support entrepreneurship in underserved communities, technical assistance as well as support from public agencies like the SBA to back higher risk loans are needed, Quinn said. “It will take the kind of joint support.”

In December, the SBA announced a new Advisory Council on Underserved Communities, as well as two new loan initiatives — Small Loan Advantage and Community Advantage — aimed at increasing the number of lower-dollar SBA 7a loans going to small businesses and entrepreneurs in underserved communities. The agency’s most popular loan product, 7a government-guaranteed loans, can be used for a variety of general business purposes including working capital and purchases of equipment and real estate. The agency also decided to end its Community Express pilot loan program on April 30.

In February, the SBA announced it was working on a new Women-Owned Small Business federal contract program to help federal agencies reach a statutory goal requiring 5 percent of federal contracting dollars to be awarded to women-owned small businesses.

More support to banks in recent years, however, hasn’t resulted in more loans to minorities, according to the California Reinvestment Coalition. Small-business lending decreased by almost 1.5 million loans and $21 billion in California from 2007 to 2009, and lending to minority-owned businesses has dropped even more dramatically in this time period, the CRC said in a recently released report, “Small Business Access to Credit: The Little Engine that Could.”

SBA lending in California, by all banks, dropped 71 percent from 2007 to 2009, while African American-owned businesses experienced an 81 percent drop in access to SBA loans and Latino-owned businesses experienced an 84 percent drop, according to the report. Bank of America, Wells Fargo, US Bank, Union Bank and Citibank dropped their SBA lending by 77 percent from 2007 to 2009, but their SBA lending to Latino-owned, African American-owned and Asian-owned businesses dropped much more dramatically — 89 percent, 86 percent and 88 percent, respectively.

“I haven’t ever seen a case of outright discrimination against a borrower because of color,” said Teresa Thomae, director of the Central Coast Small Business Development Center, which is funded by the SBA. “The challenges borrowers have is we’re in an environment where lenders are very afraid to lend. Borrowers are being declined who would’ve qualified four years ago.”

With the loss of home equity, credit lines are being pulled, Thomae said. “We’ve seen that a lot at the SBDC.”

First-time business owner Ana Brantley bought Tranquille Spa Hair and Makeup Boutique in Aptos last year after receiving counseling from the SBDC and help in securing a $50,000 loan.

“They walked me through it and gave me the support I needed to go for that,” Brantley said.

In her case, however, being a Peruvian Indian applicant may have helped her secure funding, she said.

“I think it helped my chances of getting a loan.”

This article published here.

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