Congress clearly specified in HF 266 that Community Development Financial Institutions should be a conduit for the SBA Payment Protection Program’s $30 billion set aside for small businesses. This did not happen till Wednesday afternoon when the SBA offered 7 hours of dedicated time to lenders under a billion dollars in assets.
As soon as the news spread three Minnesota based CDFIs sprung into action and alerted small businesses. Neighborhood Development Center (NDC) is already an SBA 7 A lender and could serve clients directly. African Economic Development Solutions (AEDS), a small CDFI, had a unique partnership with the Community Reinvestment Fund (CRF)to use its lending platform to service business applications. Then the magic started to happen for these minority and immigrant entrepreneurs.
A micro- business was turned down by a community bank even though she was a customer of the bank. She also tried the lottery grants but no success. NDC submitted and got her loan approved in about an hour.
A social media post from a local bank heralded how they would help non customers get loans – a small business in the neighborhood approached the bank and nothing happened. This went on for days. He could not quite remember how many applications he had turned in to different loan and grant opportunities. One bank gave him wrong information by telling him his business was not eligible. NDC got him approved in about two hours.
A health care business applied to his local bank – nothing happened. He also applied to other places and for the grant lotteries. Nothing happened. He had faith something would. AEDS used the CRF platform to get him approved today.
A small business kept searching for money to pay his workers as he had a great potential to grow and had a big risk of losing a star employee. He also approached community banks who advertised that they were accepting non-customers. He searched with a great deal of frustration. Nothing happened. Wednesday afternoon he approached NDC and got approved.
Gene Gelgelu the Executive Director of AEDS said he personally worked on 6 loan approvals with 2 more pending. Mike Temali reported that NDC served 11 clients in the past 24 hours some through their own SBA platform and 6 earlier through the CRF platform.
The spread of these businesses were all along commercial corridors in the Twin Cities where minority and immigrant businesses helped revive – University Avenue, Snelling Avenue, Rice Street, W 7th, Grand Avenue, Fairview Avenue and the Cedar Riverside neighborhood.
One afternoon of access had the power to break down tons of frustration and instill new hope and energy.
Congress was wise to include CDFIs as a conduit for the small business assistance. This small microcosm of businesses provides hard facts to show that given access, miracles can happen in just a few hours.
The staff at these CDFIs work very hard with clients with varying levels of sophistication. It takes a lot of sweat equity to work with small and micro businesses who do not have all the paperwork ready and documentation needed. As one banker told me – this is the reason banks have avoided working with these micro businesses – the opportunity cost was too high – they could make more money elsewhere in the time they had to work with micro businesses. One reason why some of these applicants could be served in a timely manner is that they had a lot of paperwork ready as they were trying to get into the door. They just needed access.
Since smaller CDFIs and community development corporations did not have the ability to directly lend out SBA funds, CRF opened an important door. Anisha Murphy, Director of Community Advancement of CRF helped connect many of these organizations to CRF’s platform and resources and this began showing positive results in small and minority businesses getting approved for PPP loans.
So if we want to rebuild America we need to invest in our CDFIs, especially the ones rooted in low income communities. Then you will see economic miracles happening every day.
The local SBA office in Minnesota has a good reputation of being connected with the community – this is one reason when this window opened they were quick to share it with the community – which in turn changed access into opportunity. Now the community has to work with the businesses to convert opportunity into economic growth and wealth building.