Filed under: Interviews, News
With black unemployment holding at double digits, the catastrophic cut off of capital to black-owned businesses is just one more disturbing trend in what is shaping up to be the Great Black Depression.
A recent study found that in some parts of the country banks decreased lending to black-owned businesses by over 80 percent. And that's not just loans to get businesses off the ground, but also the financing needed by black businesses to continue operating and make payroll.
In light of criticisms that previous attempts at spurring small business lending actually tied small businesses and lenders in knots of red tape while increasing costs, the Small Business Administration recently introduced two new loan initiatives: Small Loan Advantage and Community Advantage. Although these programs will not be available until March 2011, the SBA promises that they will target lending in under-served communities by promoting small dollar loans, providing higher loan guarantees to banks and streamlining the approval process.
I spoke with Marie Johns, Deputy Administrator of the U.S. Small Business Administration to find out if these two new programs would benefit the African American community. Here is her perspective.
Gina: Conventional wisdom is that lenders aren't lending -- so how do we know that lenders are going to be more inclined to lend under this program than they were under previous programs?
Deputy Administrator Marie Johns: Through the Recovery Act and the Small Business Jobs Act we were able to increase our lending even when traditional small business lending was pretty stagnant, but we know that with these new programs, we're going to have even more opportunities to help small businesses. They reduce paperwork for the lenders. They offer the highest guarantee that we offer -- 85% on loans under $150,000 and 75% on loans higher than that. The initiatives are pegged at the smaller dollar loans, $250,000 or less, which is a part of the small business lending market that has generally been tough to address.
Best and Worst Company Names of All Time
A great company name has to captivate customers and explain what, exactly, the company does -- usually all in one word. Names can make or break a company, and Inc.com's list of the best and worst company names of all time is an eye-opener for aspiring entrepreneurs. Click forward to see why each of these names is an asset or a detriment.
Best and Worst Company Names of All Time
"Bookgoo, which is a site that allows you to highlight Web pages, sounds like something nasty that would make the pages of a dirty old library book stick together," says Christopher Johnson, a Seattle-based naming expert, who runs The Name Inspector blog. "The way the pronunciation gets 'stuck' between the k and g sounds strengthens this unfortunate association."
Best and Worst Company Names of All Time
"The name limits this company to being identified with a single category," says Phillip Davis, the founder of Tungsten Branding in Brevard, N.C. "But they sell books, music and magazines. As a result, they must market harder to overcome this."
Best and Worst Company Names of All Time
"Just try to say it three times fast," Davis says.
Best and Worst Company Names of All Time
"The truncated geographic descriptor name limits the company to one category in one country," Davis says. "If you're looking for a computer in the U.S., this is your place. But for a DVD player? Who knows?"
Best and Worst Company Names of All Time
"There's almost no point in even trying to understand where they're going with this," says Eli Altman, a brand strategist at One Hundred Monkeys, a naming firm in Mill Valley, Calif. "OK, so they do transportation in the air -- I get it. To just say exactly what you do, and say it in the most boring way possible, doesn't really help anyone involved."
Best and Worst Company Names of All Time
"Of course, this is definitely not a word, but it sounds like one," Altman says of the VOIP phone service. "The problem is there's no inherent property in this name. You hear it, and it's just kind of a passable word. It seems like the goal with a name like this is to go unnoticed. I would love to hear their explanation of what this has to do with who they are or what they're about."
Best and Worst Company Names of All Time
"It's not clear how to pronounce this name, but the most likely pronunciation is identical to the word "incubi", the plural of "incubus," the name for a demon from Medieval folklore that rapes women in their sleep," Johnson says of the online inventor community. "Have we learned nothing from the Reebok Incubus fiasco?" [In the 1990s, Reebok came out with a women's running shoe called Incubus.]
Best and Worst Company Names of All Time
"Co America? Is there another America that I don't know about it?" Altman says. "I guess this company could say that they work with America. America is never a word you should play with or add things on to. I think people have extraordinarily complex views of the word. They're playing with a very available and present word, and they did it in a careless way."
Best and Worst Company Names of All Time
"This great example of bad wordplay seems to combine two words with unhelpful meanings: "fertilizer" (meaning 'manure') and "fair" (meaning 'so-so')," Johnson says of the online music company. "The transition between the first two syllables is unnatural in English, so the eleven-year-old in all of us can't avoid seeing and hearing the name as Fartilizer."
Gina: According to a a recent study by the California Reinvestment Coalition, small business lending for African Americans plummeted 81 percent for African American owned businesses between 2007 and 2009. How do these new programs address a decline being attributed to African Americans having less collateral and more limited credit histories?
Deputy Administrator Johns: This clearly is an issue that is very important to me and its very important to the Agency and led us to think about how we could have a better response to these critical capital needs for businesses, particularly for African American businesses and other businesses in communities of color. SBA loans are three to five times more likely to go to a woman-owned or a minority-owned small business. But we've seen lending tighten up across the board particularly in traditionally under-served communities. We know that those communities have been disproportionately hard hit by the recession. As a result of that, the overall share of SBA loans going to small businesses and entrepreneurs in under-served communities has dropped over the past two years. That's why we wanted to add these two new loan initiatives into our tool kit.
What we were hearing from lending partners is that some of our SBA paperwork was burdensome and too complicated. We developed the Small Loan Advantage program with the specific focus on making sure it was as streamlined as possible. Basically, it's a two page form so that they can quickly make loans available to small businesses who qualify. That's one response to the challenge that you raised.
In addition, we thought that it was very important to bring into SBA 's network of lending partners a new category -- what we refer to as "mission lenders." When you talk about the notion of African Americans having issues related to collateral or credit history, the benefit of the mission lenders who we'll be working with to deliver the Community Advantage program, is that these lenders are often community development financial institutions, SBA approved microlenders, or certified development companies and financial institutions who have tremendous experience in working in underserved markets. In addition to providing loans, they also provide very robust technical assistance. In additional to the capital these lenders are providing the counseling that often is the critical ingredient for businesses to ensure their success. These lenders will be partners for the first time in 7A loan program. We're excited about what we think is going be a tremendous improvement in our efforts to reach businesses in underserved areas.Gina: What steps should a small business take if they are interested in obtaining a loan under one of these new programs?
Deputy Administrator Johns: Our new website allows a small business person to log on SBA.gov and the website will lead you to one of our 68 district offices . You can go into one of our 68 offices and you can talk to someone and they can tell you what your next steps should be.
Gina: Black people got hammered economically in 2010. Do you have any predictions for how things might change or what role the SBA will play in 2011?
Deputy Administrator Johns: I'm not good at the crystal ball exercise. What I can commit to you is that we're going to work as hard as we possibly can. We come in every day on fire to figure out what we can to do to support small business growth and development so that those small businesses can create the jobs that the economy must have. We talk bout the critical role that small businesses play -- they are the engines for our economy's growth. To the extent that we can create tools for small businesses to start, grow and create jobs, that helps the entire economy to grow stronger. What I can predict is that we will continue to have a team at the SBA that comes in every day to figure how to do what we do better and serve small businesses more effectively.
Deputy Administrator Johns also wanted emphasize that the Small Business Administration offers a number of services to small businesses in addition to their loan programs including small business counseling, assistance with becoming a government contractor, and disaster assistance. You can find our more by going to SBA.gov.
Gina McCauley is the CEO of the Blogging While Brown Conferenceand the blogsMichelle Obama Watch and What About Our Daughters. She is currently completing her first book, 'Michelle Obama Watch.'
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