Climbing the capital hill
EYE ON BUSINESS
Why does equal access to funding still elude black businesses nationwide?
BY ERNEST FOUNTAIN
To play an effective role in helping cure the many challenges — unemployment, crime and lack of economic development — facing black communities nationwide, black-owned businesses have historically required access to capital.
Unfortunately, businesses owned by African-Americans are still last when it comes to accessing capital through either government programs like the Small Business Administration (SBA) or the private sector (banks and other financial institutions). For the last seven years, black-owned businesses have not received more than 2% of the $35- 40 billion the SBA lends annually.
Our local Nevada numbers are worst. There were eleven SBA loans given to black-owned businesses in Nevada in 2007 — and this stands as a record high. In the years since 2007, that number has fallen to as low as three. Nevada’s SBA program has awarded less than $1 million to black-owned businesses within the past year.
There are many reasons for these circumstances. The main one: Banks have the ability to make loans to whomever they want, and they typically help businesses that are already well-positioned financially. Another is a lack of diversity in the financial sector: Only 6.5% of black people in America work in financial institutions, and too few African-Americans understand the principles of capitalism.
We have been fighting this battle for a long time. The historical figure Marcus Garvey spoke about the importance of black people creating their own financial institutions, and Frederick Douglass was the first president of a black-owned bank in this country.
As we search for a solution to the problem, we need to consider the following five things:
- Create our own financial institutions, either credit unions or banks.
- Provide more capital access to create more black-owned businesses and help provide capital for existing black-owned businesses.
- Elect candidates that represent the interests of the black business sector.
- Make sure that those elected black officials pass legislation that enable black businesses to do business with government at all levels.
- Black people have to be deliberate in doing business with other black-owned businesses. We have to deliberately spend our money with each other.
Until next time, remember: In order to empower ourselves in this country, we have to learn the principles of capitalism and play the game according to its rules.
Ernest Fountain is CEO of New Ventures Capital Development, and can be reached at (702) 383-9522.