Nationally, according to the U.S. Small Business Administration (SBA) 2016 Office of Advocacy, African Americans own 2.6 million small businesses, employ 975,000 people and generate more than $150 billion in annual receipts nationally. In Detroit, the National Business League (NBL) reports there are more than 47,000 African American-owned businesses. Bottom line, these businesses are key drivers in the national and local economy.
As the voice for the nation’s entrepreneurs, the SBA supports African American entrepreneurs for success in business through its lending, contracting and counseling programs. As an independent agency of the federal government formed in 1953, its primary objectives are to aid, counsel, assist and protect the interests of small business concerns, to preserve free competitive enterprise and to maintain and strengthen the overall economy of our nation.
In 2018, Its core mission remains the same–which is to help Americans start, build and grow businesses. However, it has evolved to assist U.S.-based small businesses effectively compete in a global marketplace.
Recently, the SBA MIchigan District Office announced a Strategic Alliance Agreement with the NBL which covers the state of Michigan. To better understand how this agreement will benefit African American businesses, I recently sat down with Constance Logan, District Director, SBA Michigan District Office, for her perspective and insights.
Lee: The SBA is rebranding itself when it comes to working with minority business owners. Please talk about this and why now?
Logan: The SBA is in the process of rebranding our image so that all entrepreneurs can more easily recognize and identify with the programs and services that the Agency offers. We want small business owners to think of SBA as their federal government resource for all things small business. The rebranding will reflect the Agency’s mission to be effective and efficient in serving America’s entrepreneurs.
Lee: Recently, Strategic Alliance Memorandum (SAM) between the SBA and the National Business League, Inc. was signed. What does it mean and what impact will it have on African American entrepreneurs in Detroit and why is this significant?
Logan: The signing of the SAM will allow the SBA to ensure that people of color are served to the fullest extent. SBA and the NBL together will create and offer programming that meets the needs of African American entrepreneurs, addressing topics such as access to financing, or entering the federal marketplace through our loan products and government contracting services.
We’ll connect African American business owners with the consulting and training resources through our network of partners such as the small business development centers, SCORE, women’s business centers, and our veteran business opportunity center.
Lee: From access to capital to lack of strategic planning, there are many issues impeding business growth, success and sustainability. How will this relationship address these issues?
Logan: As we move forward in this formalized relationship with the NBL, we will meet regularly to discuss the needs of black entrepreneurs and work toward addressing those needs. For example, we will conduct training programs to help NBL members as well as other African American entrepreneurs understand the financing process and help them to position their business to be successful in obtaining small business loans.
We can’t guarantee that everyone who applies for a loan will be approved, but our training and consulting programs that really prepare a business owner so that they are ready to have that conversation with a lender.
Lee: What role will your funded resource partners have in addressing capital issues, for example?
Logan: Our funded resource partners can help business owners understand the key elements that go into making a loan decision, such as credit history, cash flow position, or collateral requirements. The bottom line is that we will be very deliberate in making sure black entrepreneurs can readily access our programs. Signing the SAM with the NBL is a key step toward that goal.
Lee: How has the SBA Michigan District Office helped African American small business owners?
Logan: Capital Access: So far in FY2018, both the number and dollar amount of SBA-guaranteed loans to African American small business owners are up significantly over FY2017. The number of loans is up 30% over last year, and the dollar amount of those loans is up 24%. The microloan program, which provides loans of less than $50,000, reached an all-time high of $63 million in loans to 4,600 small businesses – with African Americans making up a third of the borrowers.
Contracting: The SBA’s 8(a) program ensures minority entrepreneurs have access to government contracts, and the HUBZone program helps small businesses in Historically Underutilized Business Zones in urban and rural communities get preferred access.
Counseling: The SBA’s 68 district offices and vast network of resource partners ensure entrepreneurs seeking advice for starting or growing a business can find mentors in their own communities. These include Veterans Business Outreach Centers, Small Business Development Centers, SCORE chapters, and Women’s Business Centers. In fact, almost 60% of African American-owned businesses are women-owned.
Lee: Any results to date?
Logan: In Michigan, SBA guaranteed 81 African-American/Black in Fiscal Year 2017, for a total dollar amount of $14,370,100, a 56% increase in the number of loans and a nearly 74% increases in the dollar amount over FY 16.
As of January, compared year-over-year, FY 2018 African-American/Black lending is trending higher nationally and in Michigan. Nationally, the number of loans is trending 23 percent higher and total dollar amount is about 18 percent higher, and in Michigan, the number of loans is trending 11 percent higher and total dollar amount is about 14 percent higher.