Time was when a small business sought an infusion of cash, they would apply for it from a bank. And, incredibly, the financial institution would usually agree to lend the money. However, it’s no secret that since the 2008 recession, small business lending is not business as usual any longer.
It’s not that banks won’t lend money to a small business owner in today’s economy. The reality is, according to Steve Fireman, president and general counsel of the Economic and Community Development Institute (ECDI) in Columbus, the answer to whether banks will generally lend capital to a small businessperson “depends on who you ask.” For example, if the respondent is African-American, obtaining credit in today’s world is still extremely difficult, he says. According to Fireman, approximately two-thirds of small business loans are granted to white entrepreneurs.
While banks have slowly opened their wallets to entrepreneurs seeking loans of over $250,000, they don’t cater to those requesting micro-loans, which are smaller in amount. That’s where organizations such as ECDI come in, says Fireman. That’s because the ECDI, which has expanded to other Ohio cities since its inception 13 years ago, caters not only to issuing micro-loans to would-be or established entrepreneurs, they also educate them about how to run their enterprise.
“Learning and training are just as important as money,” says Fireman. The level of educational opportunities and support available through ECDI “set us apart from a bank,” he says.
Whether access to an organization such as ECDI is available in your area or not, Fireman touts the expertise the Small Business Administration (SBA) offers entrepreneurs.
“Don’t be intimidated by the SBA. That’s what they are there for. Seek them out to see what lending opportunities are available in your area,” he suggests. Not only does the SBA support the mission of small businesses, they have vetted the companies who claim to want to help the small business owner.
Organizations like the ECDI are members of the Opportunity Finance Network, a national consortium comprised of opportunity investors that align capital with justice, according to its web site. A map of its locations across the United States can be accessed by clicking here.
Tami Kamin Meyer is an Ohio attorney and writer who tweets as @girlwithapen.