Concordia Live: Supporting Underbanked Small Businesses in the U.S. South and Southeast
Rodney Ferguson, Concordia Senior Advisor, President and CEO of Winrock International
My colleague Tonitrice Wicks and I recently participated in the first Concordia Live event of 2022. Concordia’s monthly live webinars spark global conversations and highlight innovative partnerships across the Concordia community. The topic for this first webinar of the year was chosen intentionally because it lasers in on one of the root causes of the deep social inequities in the U.S. – one that suppresses economic growth and prosperity, and limits opportunity in historically disenfranchised communities.
Our webinar focused on financial inclusion, which is glaringly absent in many places in the U.S., especially in rural communities across the South and Southeast. Financing is available in those areas, but it can be exclusive and difficult to obtain, especially if your enterprise is small, and more so if you are a woman or a person of color.
We’re working to change that.
Tonitrice and I joined a small panel of experts, including Robert Meloche, head of programs at Visa Foundation, and Caroline Yarborough, syndications and strategy officer at Calvert Impact Capital, with whom we’re working on an innovative new program to help underbanked businesses not only bounce back from COVID, but lay the foundation for inclusive, long-term growth.
Calvert Impact Capital’s Southern Opportunity and Resilience (SOAR) Fund was created in early 2021 by local and national lenders to provide economic recovery loans to small businesses in 15 states across the South and Southeast. Since then, the Fund has drawn inquiries from hundreds of small business owners, many of whom desperately need affordable financing. Funded by the Visa Foundation, Winrock’s SOAR Technical Assistance Project is designed to help businesses in a sub-set of those states develop and submit strong loan applications, and offers continued, post-loan support so their enterprises can thrive, grow, and contribute to economic development in the places that need it most.
The technical assistance helps small business owners navigate the process of qualifying, applying for, and complying with loan requirements, even if they’ve been turned down, elsewhere. Applicants can access workshops and training, credit counseling, business plan development, accounting and financing coaching, and other support, including mentoring from other business owners.
“It’s reaching exactly who it was set out to serve,” Caroline said.
Tonitrice is a senior program officer with Winrock’s U.S. Programs team. She’s also an expert at managing entrepreneurial education programs and grants, and oversees the Visa Foundation-funded SOAR Technical Assistance Project. A big part of her job involves building relationships with supporting organizations in the seven states targeted by the project: Alabama, Arkansas, Louisiana, Mississippi, Oklahoma, Tennessee, and West Virginia. She shared insights about loan access and support, including something that resonated deeply with me.
In disenfranchised communities in the South, she said, trust is hard-won, in part because traditional bank loans and other financing often aren’t obtainable there, but also because those in charge of financial resources aren’t visible. To address that, Winrock works with well-known local partners who live in and understand their communities and can provide entrepreneurial services to prospective loan recipients.
“We’re supporting businesses through those fears, and we’re here … connecting them to other successful businesses that have received funds” for networking, advice and encouragement, Tonitrice said.
Robert, who has worked on inclusive financing for two decades, reminded us that socioeconomic inequities existed long before COVID struck. But those disparities have since deepened dramatically.
“The challenges, these gaps for women borrowers, for borrowers of color, have gotten worse,” he said, adding that “one of the reasons that these borrowers have been shut out of the financial system is because of some of the structures around things like credit score that we’ve become over-reliant on as a proxy for people’s ability and willingness to repay. And if you’ve been shut out of the credit system historically, there’s really no way in.”
SOAR is helping to open those doors.
Loans of up to $100,000, each, already have gone to florists, family-owned restaurants, and other small businesses, including Main Street shop owners in small towns and rural communities. Many of them likely closed at least temporarily due to COVID. Ninety percent of the loans issued so far have gone to businesses with 10 or fewer employees and those with under $1 million in annual revenues; and 80% have gone to women-owned and BIPOC (Black, Indigenous, People of Color) recipients, Caroline said.
How can you get involved, and help bridge the socio-economic divide?
Robert urged us all to learn about and support Community Development Financial Institutions, including credit unions, which offer banking services while supporting underserved communities. Tonitrice emphasized the need for all companies to look harder, both internally and externally, at issues affecting diversity, equity and inclusion; we all need to be agents of the change we want to see.
Winrock welcomes new donors to fund technical assistance for SOAR applicants, and we’re always looking for private and public partners that support our mission of empowering the disadvantaged, increasing economic opportunity and sustaining natural resources in the U.S. and around the world. We know that opportunity and resilience are powerful antidotes to inequality.
With committed, visionary collaborators like Visa Foundation, Calvert Impact Capital and other organizations Winrock is connecting with through Concordia, who knows how far we can go?
This blog was originally posted on Concordia.net.