Florida’s Loan Program for Black-Owned Businesses Isn’t Effective
Like many new business owners, Maria Chambers could use some help.
She and her husband opened CNC Soul Food and Jamaican Restaurant in Fort Pierce last December, but the couple would still like to make many improvements inside and out of the building.
“We need the money,” Chambers said. “Things have been tough for the restaurant industry, especially new restaurants. It’s hard to get things done.”
It’s a familiar story. Access to capital is an ongoing challenge that all business owners face, especially those just starting out.
In this case, however, it’s frustrating because the couple should be able to get funding through the state’s black business loan program.
Maybe “frustrating” isn’t a strong enough word. This program, in its current form, is a mess that itself needs major renovations.
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The program, administered by the state’s Department of Economic Opportunity, was launched in 1984 to provide black-owned businesses with access to loans they might not be able to obtain from other sources.
It’s a wonderful concept – and another business along the Treasure Coast could benefit from it as well.
The problem seems to be in the execution of the concept.
DEO press secretary Morgan Jones said there were only two organizations authorized to administer loans under the program: the Florida A&M University Credit Union and the Miami Bayside Foundation.
(I found information on the DEO website suggesting that the North Miami-Dade Community Fund was also authorized to administer program loans, but apparently that is no longer the case.)
Kathleen Murphy, executive director of the Miami Bayside Foundation, said her organization has distributed about 40 loans totaling $2.4 million since April 2019.
The loans, which have no processing fees, can vary between $5,000 and $150,000. Murphy said interest rates are 6% and loans must be repaid within five years.
“We had very few problems,” Murphy said. “It’s a great program. We’ve helped a lot of businesses.”
Which, again, sounds wonderful. Except that the Miami Bayside Foundation only considers loan applications from businesses located in Dade, Broward, and Monroe counties.
If your business is based elsewhere in the state of Florida, including the Treasure Coast, Florida A&M Credit Union is your only option.
The problem is that Florida A&M is not processing loan applications through the program at this time. Gerald Hinson, director of business loan processing at the credit union, said there was a contract dispute with the state that had been ongoing since he started working there nine months ago.
“We hope it opens up,” Hinson said. “I’m not sure what the heist is.”
According to Jones, the credit union missed the deadline last year to submit its annual recertification forms.
“Since we value our partnership with FAMU, WD has granted a waiver of the deadline, allowing the credit union to recertify,” Jones wrote in an email. “Since the waiver was granted, the DEO has met several times with FAMU Federal Credit Union leaders to modify the existing contact to meet their needs while remaining within the bounds of state laws and rules. of the agency, in order to maintain the integrity of the program.”
Jones said the DEO sent the credit union an amended contract on Feb. 14 and was awaiting a response.
The state could help, but will it?
While Hinson said the credit union would still accept loan applications while the contract dispute is being resolved, new loans through the state program are not being processed.
Instead, Hinson said the credit union is focused on processing other loans available through programs offered by the Tallahassee and Leon County governments. Which, of course, does not help businesses on the Treasure Coast or elsewhere.
The net effect of all of this is that the money supposedly available to black-owned businesses statewide is only accessible to those in three counties.
“It’s almost like we’re in a race and we’re still in the starting blocks,” said Chauncelor Howell, chairman of the Treasure Coast Black Chamber of Commerce. “It’s definitely a problem. Elected officials need to be aware of this.”
They certainly do. Although the contract dispute between WD and Florida A&M Credit Union was resolved today, having so few loan servicers creates a bottleneck.
Murphy said the Miami Bayside Foundation spends a lot of time and money promoting the program through radio and television ads and spreading the word at community events. Even with these efforts, it’s difficult to get the message out to the people who need to hear it in a market as large and diverse as the Miami metro area.
“We do everything we can to advertise,” Murphy said, noting that up to 20% of the funding his organization receives from the state can be spent on marketing.
Over the past few years, including the budget just approved for the next fiscal year, the Legislative Assembly has authorized just over $2.2 million per year for the program.
If that money is divided between the two qualified administrators, it does not represent much for the loans, especially if 20% can go to marketing.
A marketing budget of this size also doesn’t go very far to publicize a statewide program.
Howell said he doubts many black Treasure Coast business owners know the program exists, let alone have taken advantage of it.
“I don’t know of anyone on the Treasure Coast, or anywhere else for that matter, who has a story to give about this program,” Howell said. “The information about the program stays up there around the capital. Maybe more administrators are needed.”
I am okay. If red tape is a barrier to getting more administrators, the DEO should streamline its bureaucratic process.
At a minimum, there should be more places across the state where business owners can turn to apply for loans under this program. There should also be more funding available, both to market the program and also to provide loans.
It’s nice that state officials had the foresight to create the program nearly 40 years ago, but in its current form, it’s little more than window dressing.
I can’t eat enough jerky to help chambers raise the money they need to upgrade their business. The state could help them, but will it?
This column reflects the opinion of Blake Fontenay. Contact him by email at [email protected] or 772-232-5424.