Business loan

Local banks could help bolster black business loan program

Everyone loves a story with a happy ending.

Unfortunately, when it comes to a state-sponsored program to provide loans to Black-owned businesses, I don’t think we’re there yet.

A few weeks ago, I wrote a column about the Black Business Loan Program, administered by the state Department of Economic Opportunity.

The program, which has been in existence since 1984, aims to provide access to capital to Black-owned businesses that may have difficulty obtaining loans from other sources, for whatever reason.

This could be a great benefit for businesses located along the Treasure Coast, but it hasn’t worked out that way.

Chauncelor Howell, president of the Treasure Coast Black Chamber of Commerce, said he was not aware of any local businesses that had benefited from the scheme.

There could be various explanations for this.

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The state has authorized only two administrators to process loans under the program – the Florida A&M University Federal Credit Union and the Miami Bayside Foundation.

However, the Miami Bayside Foundation only accepts loan applications from businesses in three counties: Dade, Broward, and Monroe.

This left Florida A&M Credit Union as the only loan servicer with statewide reach. But Florida A&M hadn’t issued loans through the program for months because of a contract dispute with the state.

I’m pleased to report that the contract dispute has apparently been resolved in the past few days, leaving Florida A&M free to accept loan applications from businesses in Florida’s 67 counties.

This is good news, no doubt.

However, other questions remain about the effectiveness of the program, even with Florida A&M in the mix.

The Department of Economic Opportunity publishes an annual report that includes statistics on the Black Business Loan Program. According to the most recent report, which traces the program’s history back to fiscal year 2015, the Legislative Assembly has consistently allocated more than $2.2 million per year to the program.

The program has loaned more than $2.2 million in a single year only once in the past seven years. In other years, loan amounts have been lower, sometimes much lower.

In fiscal year 2015, for example, only 12 loans totaling $153,631 were issued.

During fiscal 2020, 18 loans were issued for a total of $809,700. During fiscal 2019, 17 loans were issued, totaling $990,011.

CNC Soul Food and Jamaican restaurant owners Talbert and Maria Chambers, of Port St. Lucie, serve regular customers Susan Potter (center) and Cheryl Wilson, both of Fort Pierce, Thursday, Feb. 10, 2022, in the neighborhood of Lincoln Park in Fort Pierce.  The couple, together for nearly 20 years and both from Jamaica, worked hard to open their restaurant in January and could use funds to improve the interior and exterior and increase marketing.  The state offers financing through the Black Business Loan Program, but entrepreneurs across the state have struggled to access the money.

Does this mean that there were no other companies that could have benefited from the program during those years? I assume that is not the case.

So where does this money go if it is not used for loans?

“Any funding unspent in the appropriate budget year is retained by the administrator for lending in subsequent years,” Morgan Jones, the state agency’s press secretary, wrote in response. to an e-mail request.

But what happens to funding when a director drops out of the program or is inactive for a long time, like Florida A&M was while its contract issues were being resolved? Are loan funds essentially out of circulation and unavailable to businesses that could benefit from them?

How hard is it to become a loan servicer, anyway? The contract problems faced by Florida A&M and the relative lack of other institutions willing to play this role suggest that there could be bureaucratic hassles that have scared off others.

Although I have made repeated requests to interview someone from the Department of Economic Opportunity about these and other program-related issues, my requests had not been granted at the time of this writing.

Talbert and Maria Chambers, owners of CNC Soul Food and Jamaican restaurants, of Port St. Lucie, greet relatives and seasonal residents Vanassa and Dennis Daniels Thursday, Feb. 10, 2022, in the Lincoln Park neighborhood of Fort Pierce.  The Chambers, together for nearly 20 years and both from Jamaica, worked hard to open their restaurant in January and were able to use funds to improve the interior and exterior and increase marketing.  The state offers financing through the Black Business Loan Program, but entrepreneurs across the state have struggled to access the money.

Meanwhile, others also started asking about the program.

Larry Lee, a former member of the Port St. Lucie State House of Representatives, believes that more loan servicers are needed, in different parts of the state. Lee suggested community colleges could administer the loans through their small business development offices.

“I’m a big believer in the community college system,” Lee said. “I think that’s the key.”

Having only two licensed administrators statewide is fairly common, according to the state agency’s report. There were two directors in five of the seven years covered by the report.

There were three trustees last year, but the Community Fund of North Miami-Dade pulled out of the program. There was only one director during the 2014-2015 fiscal year.

Representative Toby Overdorf, R-Palm City, also favors a more regional approach, with administrators assigned to different geographies.

“If we can’t withdraw the money, there’s no point,” Overdorf said. “This is an area that has not had the attention it deserves.”

Overdorf said he expects the DEO to pay more attention to addressing program shortcomings as the state rebounds from the economic slump caused by the COVID pandemic.

He also noted that there are other resources available to black-owned businesses, such as the Black Business Investment Fund, a private organization based in Orlando.

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Sen. Gayle Harrell, R-Stuart, said states may soon have access to more federal funding for loans to Black-owned businesses. Meanwhile, she invited more financial institutions to become loan administrators.

“There may be more, if more banks want to do this,” Harrell said. “I would encourage more banks and credit unions to become directors.”

At least one bank with ties to Treasure Coast has expressed an interest in serving as a trustee, but whether that interest will materialize remains to be seen.

Maybe one day Treasure Coast will have one or more local loan officers for the program. This kind of regional approach could also benefit other parts of the state.

We are not there yet.

This column reflects the opinion of Blake Fontenay. Contact him by email at [email protected] or 772-232-5424.