This month, PCV was inspired to sit down with Seacoast Bank to speak about your small company, and just what CDFIs like ours do to drive more financial and human capital to Main Street, where the real job creators are. Here’s what he had to say:
Tell us about Pacific Community Ventures. Where do you turn?
Pacific Community Ventures is a nonprofit social enterprise that engages smaller businesses, investors, and policymakers to construct an economy that actually works for everyone.
We achieve our mission in 2 ways. First, we offer smaller businesses with access to the capital and mentorship they need to grow and create quality jobs for employees in low- and middle-income communities. Second, we work with impact investors to assist define, measure and communicate the social connection between their investments to stimulate more investment in underserved communities.
Why are you currently enthusiastic about empowering small businesses and entrepreneurs?
While our economy’s improved on paper these past six years, the majority of us know that’s not the whole story. During the last few years, quality job creation continues to be anemic, and way too many workers have jobs that don’t permit them to support themselves as well as their families. Because the end of the Great Recession, 12 million jobs have been created – but average wages have dropped 23 percent. The top five fastest-growing occupations will be in low-wage work, in personal care and at places like strip malls and fast-food restaurants.
As our nation’s job creators, smaller businesses can be a part of the solution. Based on the Federal Reserve Bank of Atlanta, places having a high density of locally-owned businesses have higher incomes and employment growth, and far less poverty. And, economists at Yale and the University of Bristol write that when in high unemployment, small businesses both create and retain more jobs than large companies do.
What is the current financial climate for small business in the U.S.?
It’s getting stronger! Independent businesses experienced healthy sales growth and expanded hiring in 2022, based on the Institute for Local Self-Reliance. Actually, small businesses saw a 3 % jump in sales throughout the holidays, versus just over 1 % in particular national chains. This local-first success means more jobs!
What advice are you able to offer small businesses and entrepreneurs on finding loans and investors for their businesses?
Go to your bank first, they often possess the best rates. If they can’t fund you, search for an SBA lender, as their rates will be closer. And lastly, should you the standard financial system can’t help you, look for a nonprofit community development lender (CDFI) like Pacific Community Ventures. We are able to work with most small businesses that banks or the SBA can’t — and that we don’t have the sometimes predatory rates that online lenders use.
What would be the most typical frustrations or complaints you listen to small business owners about finding savings for his or her businesses?
The largest complaint we hear is that banks or SBA lenders have criteria that’s excessive. For instance, we funded a small company whose owner had terrible credit due to their mortgage throughout the recession. But, like a business proprietor, these were top-tier. Because of their strict guidelines, the bank couldn’t work with her. But we're able to. And today her loan pays back, her credit is great, and she’s fully bankable at her business.
What are the most typical mistakes you see small business owners making in regards to funding their business?
Turning to online lenders without reading the fine print, or really being aware of what they’re getting into. If your business owner needs $50,000, and they need it now, it’s easy to have that money online. But, we’ve caused many small businesses in recent years who're drowning indebted simply because they didn’t realize the predatory interest rates that were charged. We’ve managed to help a number of them re-fund at lower rates, but it’s a major challenge.
Why is mentorship essential for small business owners? Where are the most useful places to find advisors?
Mentoring doubles your chances of success. According to the Sba, only 30 % of businesses make it to Ten years. However for small business owners with a mentor, 70 % survive to that 10-year mark, double the rate of other small businesses.
The day-to-day needs of creating your company grow, and making that growth sustainable, are beyond the skills associated with a one person. You started a great company – but now that you’re growing, how do you write your own business plan? Create a brand strategy? Having an outside mentor is vital.
A site like BusinessAdvising.org is really a way to get combined with a mentor, for free! it leverages a web-based platform and volunteerism to provide small businesses with high-quality mentoring at no cost that removes geography as a barrier. If your clients are in the Bronx, and the best advisor for your business resides in Virginia, BusinessAdvising.org could make that match happen.
What types of businesses are you looking forward to investing in today?
Any which come through our door! In most seriousness, though, small business owners create jobs, and we’re here to assist them to. We’ve noticed in the final Ten years that female small businesses, and people of color, have a tendency to start many more businesses than average, however they possess a harder time getting capital. So dealing with as well as for them is a big priority for all of us. In the last year, 60 percent in our borrowers were female, and 30 % were people of color.
What final suggestion can you offer small business owners on starting and growing their businesses?
Look for a mentor. It can only help! We’ve seen business owners who feel like they spend every day working in their business, this is not on their business. And getting combined with a mentor is a method for them to possess a thought partner to actually work through their challenges. especially if it’s challenging that’s from their main specialization.
(You can read the full interview here.)
