“Remember that the airplane takes off against the wind, not with it,” a quote attributable to Henry Ford of Ford Foundation and Ford Motor Co., rings as true for entrepreneurs today as ever.
Entrepreneurs, micro, and small business owners remain the backbone of the American economy. At last count, there were 31.7 million small businesses in the U.S., accounting for 99.9% of all businesses, according to the Small Business Administration.
These entrepreneurs, micro-businesses, and small businesses are not alone — they have an ecosystem of support in their corner. However, it’s not always clear where to turn for assistance.
One place to start is with a trusted banker. Banks and bankers specializing in community and business banking serve as valuable referral partners to critical resources for small and micro-businesses.
“As community and business bankers, we work with business owners at all stages of growth, and we’re familiar with the pain points,” said Neura Conejo, associate vice president and business relationship manager at Umpqua Bank. “We often open doors and connect business owners to potential resources and financing they may not have considered.”
EACH ONE, TEACH ONE
Some entrepreneurs may need to begin their journey of business ownership at a different stage, such as creating or improving their credit score, or understanding the basic financial statements needed to run a business.
In that case, another place entrepreneurs can access resources is through organizations called Community Development Financial Institutions (CDFIs). CDFIs help connect micro- and small business owners with technical assistance, coaching, lending and more.
Micro Enterprise Services of Oregon (MESO) is one of these important CDFI resources, and there are others, including Business Impact NW, Community Development Corp., and more.
“So many businesses start out of challenges, and it’s rewarding to see them come to life,” said Jataune Hall, MESO’s Portland business development manager. “We have a motto, based on an African proverb, “Each One, Teach One” that encourages passing on the business knowledge and resources gained at MESO to the next entrepreneur.”
WHY CDFIS
CDFIs fill a gap in financing business that traditional banks cannot. Banks operate within specific regulatory limits when it comes to financing businesses. However, these same banks and bankers serve as important referral partners and funders to an entire ecosystem of support for small businesses.
Banks invest in and partner with CDFIs, Community Development Corporations (CDCs), and other business incubators for micro-to-small businesses, creating a financial ecosystem that helps whole communities thrive.
A few benefits of seeking financing through a CDFI include quick turn-around times, assistance for ITIN holders who do not have a social security card, the ability to serve people without a credit history, and penalty-free pre-payment of loans.
Related federal initiatives, such as Community Development Block Grants (CDBGs), can also be creatively combined to revitalize neighborhoods. There are more than 1,000 CDFIs and roughly 3,600 CDCs across the country. And, it’s worth noting that new federal Rapid Response Funding is being deployed CDFIs to promote an equitable and sustainable economic recovery.
OPPORTUNITIES FOR ENTREPRENEURS
Local area businesses like DC Ringz, Queendom Cuts, and Hana’s PDX have accessed this powerhouse of business resources available through banks and CDFIs to realize their dreams of starting and growing their businesses.
CDFIs like locally based MESO connect entrepreneurs who have a seed of an idea — or more — to the business planning and incubation process that leads to economic self-sufficiency. Through a micro-enterprise academy, coaching, and access to resources such as grants and investments, MESO assists business entrepreneurs in creating a business plan, product development, marketing, and more.
Umpqua Bank and other banks have recognized the exceptional efforts of CDFIs to adapt and continue serving the community during the pandemic, resulting in additional grants and investments to serve more underrepresented business entrepreneurs.
“When businesses adapted overnight in response to the pandemic, MESO adapted too by adding web and marketing technical assistance to boost their online presence and move to e-commerce models,” said Cobi Lewis, MESO’s executive director.
For banks like Umpqua, the goal is to continue to form strong, strategic partnerships between CDCs, CDFIs and other nonprofits to help strengthen the financial ecosystem for micro and small businesses, especially for under-resourced business owners. This collaborative work has the power to expand, diversify and intensify opportunities for all.
After all, building strong communities and businesses means facing the headwinds, well, head-on.
Brenden Butler is vice president and community development officer at Umpqua Bank. He can be reached at brendenbutler@umpquabank.com. Umpqua Bank is a West Coast regional bank, recently recognized by J.D. Power as top in customer satisfaction and named one of America’s Best Banks by Forbes magazine.