SBA wants help for under-served areas

LONGMONT — Kenneth Robinson is one of few minority business owners in Boulder County.

He says it’s taken 15 years to build his company, a Longmont-based janitorial service called Finishing Touch, from about $3,000 to $3 million in revenues.

It hasn’t been easy.

Five years ago, Robinson and his wife, Glenda, president of their company, were pursuing a $3 million contract. First, they needed capital to get the ball rolling. They went to banks needing $200,000 but asking for $100,000, taking examples from the early days of their business.

Kenneth Robinson says he had to jump through hoops only to get a fraction of what the company would need.

“The exercise that we had to go through to get the funding to do this I just felt was the extreme — from putting my house up, to putting all my accounts receivables up, putting up my car, all my equipment, and in addition to that, I had to go in and give them a copy of the contract itself,” he recalled of his pursuit of the million-dollar deal. “They wanted to talk to the people that we received the contract from. It was kind of like it was a credibility thing.”

Which only riled him more, because he’d helped several businesses with “shakier” ventures get funding.

“I know for a fact that other people don’t have to do that, and I know that because I helped them prepare their own loan packages on a lot shakier deals,” he said. “They were all white males.” In the end, the Robinsons got an SBA loan.

Such experiences are why President Clinton and the U.S. Small Business Administration have been targeting minorities, women, the disabled and veterans, to offer help in establishing successful businesses. The New Markets Initiative, launched in July, is an attempt to bring venture capital and mentoring to inner-city and rural areas.

Though Boulder County isn’t necessarily the inner-city or a rural area, the initiative could help businesses there that want to expand into those markets or that wanted to help others do so. It also could prove valuable to businesses in the more-rural areas of Larimer or Weld counties.

Fred Hochberg, SBA deputy administrator who visited Denver in July to promote the New Markets Initiative, says it’s a way to bring economic prosperity to historically under-served areas.

“It’s really a push to make sure all Americans get to participate in this boom economy,” Hochberg said. “We have one of the most enviable economies in the world right now.”

The New Markets Initiative is an attempt to pump some $15 billion of new investments for urban and rural areas. President Clinton has proposed a tax credit of up to 25 percent for investments in programs, such as community development banks and corporations, that serve inner-city and rural communities.

The SBA hopes to approve approximately 10 new nonbank lenders to originate loans under its General Business Loan Guaranty program. It also will select 10 to 20 venture capital firms with proven records in community-based venture capital to create New Markets Venture Capital Firms (NMVCs). Through the NMVC program, equity funds of private investors would be matched with government debt guarantees of up to $10 million per NMVC, with interest on the debt deferred.

Through the initiative’s America’s Private Investment Companies (APIC program), investors would contribute $100 million in equity with the SBA and the Department of Housing and Urban Development providing up to $200 million in loan guarantees. APICs would make equity investments in larger businesses that are expanding or relocating in inner-city and rural areas.

The SBA has had ongoing new marketing programs targeted toward women and minorities. Keller Hayes, president of the Colorado Women’s Chamber of Commerce, located in Golden, said women are most likely to start businesses with credit cards because it is difficult for them to find financial support.

“Think about starting out with 20 percent instead of 8 percent,” Hayes said. “It’s a huge difference. One of the things that continues to impact women is their credit history. Women are getting much better about that now,” that even if they are married, they need to have a separate credit history as well as to build that history for business.

“It’s not like they have bad credit. It’s just that they haven’t worked at building their credit history.”

Hayes spoke of one woman who was looking for a line of credit for her business, which had been in operation for five years. “She was looking for operating capital,” Hayes said, “and all she could get was a $1,000 line of credit. $1,000 is nothing.”

In addition to credit history, a big part of getting capital is a business’ age and its track record. But many new businesses, especially those that take on new markets, don’t have track records.

“The problem is in order to build a business, you need capital, you need equity and you need bank loans,” Hochberg said. “You can’t always do this by yourself.”

The SBA offers several programs to help businesses get up and running.

For information, see www.sba.gov/>www.sba.gov.

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