DENISE A. BARGE
Men are sent to the moon, but when it comes to obtaining business financing, people can still fall through the cracks.
Especially minorities – but in Rhode Island there are still plenty of business-minded options for minorities funded at both state and federal levels.
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Key players in these efforts are the Minority Investment Development Corporation and the Rhode Island Coalition for Minority Investment (RICMI), both sharing space on the second floor of 216 Weybosset St. in Providence.
A certified federal Small Business Administration lender, the MIDC started in 1994 as an effort among the urban community, the Greater Providence Chamber of Commerce and local banks to help folks formerly considered “not bankable” get financing, with a special target on women and minorities, said Denise A. Barge, who leads both organizations as executive director.
Because their budget doesn’t include marketing, Barge believes there’s plenty more that should be known about the agency and the opportunities they can provide to the minority community. “That’s why I’m always trying to get the word out.”
The MIDC is separate from the Small Business Administration and has raised its money through banks and funding from two corporations, Narragansett Electric Co. and the Providence Journal Co. It does, however, use SBA eligibility guidelines that say a business must be at least 51 percent owned by either “a socially or economically disadvantaged citizen” and that management and daily business operations must be controlled by such an individual.
Although in theory the MIDC is geared toward low and moderate-income individuals its targets are “mostly ethnic,” and perhaps a better and more inclusive term would be “disadvantaged entrepreneurs,” Barge said, which would take in a variety of economic and ethnic criteria.
Since the program began Barge estimates they’ve received more than 24 million applications and approved about 120 loans, closing on about 100 of them with a total value of about $4.2 million. Interest rates vary based on the size of the loan and are currently about 12 percent on a fixed term.
They’ve given at least 90 percent of their loans to minorities and about 30 percent of their loans to women-owned businesses, Barge said, with a portfolio that’s “pretty diverse,” from restaurants, gas stations, meat markets, mom and pops to a maker of car mats, a temporary employment agency and a fried snack manufacturer.
Barge said that besides focusing on minorities and clients with low to moderate income they are also interested in investing in businesses located in state “Enterprise Zones” in the communities of Central Falls/Cumberland, Cranston, East Providence, Mt. Hope, Pawtucket/Lincoln, Portsmouth/Tiverton, Providence, West Warwick and Woonsocket/Cumberland.
The R.I. Coalition for Minority Investment is a non-profit group that provides pre-loan and technical assistance, with clients that include recipients of MIDC loans. Assistance from RICMI helps clients manage their funds and increases chances for success, especially for start-ups, Barge said.
RICMI is also the state’s only lender of micro-loans loans for minorities, in amount ranging from $2,000 to $2,500 with terms up to six years. This function is actually administered through the SBA with interest rates currently at about 11 to 12.5 percent. For more information about either program call 351-2999.
Other business and financing options
The SBA’s “8(a) Program” provides minorities with federal government contracts and other assistance. Under the program the SBA serves as a prime contractor, entering into contracts with other federal departments and agencies and negotiating subcontracts with small minority-owned companies.
Manufacturing-specific contracts less than $5 million and all other contracts less than $3 million are awarded non-competitively, while contracts greater than these are competitive. These 8(a) loans are designed to foster business ownership and competitive viability for minorities and expand their participation in federal procurement of equipment, products and services.
Besides meeting SBA minority standards an applicant firm must also qualify as a small business based on industry classification size standards and except for tribe-owned concerns must have been in business for two full years. Brokers, packagers and franchises are ineligible. For more information, call 528-4561, or visit the Rhode Island district office of the SBA at 380 Westminster St., Providence.
Urban Ventures, located at 150 Colfax St. in South Providence, is a business incubator facility operated by the state Economic Development Corporation to assist minority and low or moderate-income entrepreneurs to start businesses and boost economic development in urban neighborhoods.
The program’s shared overhead of secretarial, office and computer supplies reduces a business’s initial outlay – and the close proximity of other minority entrepreneurs means ideas can be easily shared.
But more than a facility, said Executive Director Justin Aina, Urban Ventures provides a “business development environment,” that helps businesses that already exist and have a clientele further their business plan so they can grown and move on “to develop better things.”
To join Urban Ventures a business must have job growth potential and prospects for creating a new product, technology or service or meeting a current demand.
Urban Ventures now has six businesses in residence and expects a seventh to come aboard within the next month. Aina said about 70 to 80 percent of the current occupants are technology companies. For more information, call 780-8833.
The EDC’s Minority Business Enterprise seeks to capitalize on state law that requires minority business enterprises to be given a minimum of 10 percent of all construction or procurement projects. The program’s goal is to increase the number of certified MBEs available for contract competition. The program, located at the state Department of Administration, helps in all phases of business development. For more information, call Charles Newton, 222-6670.
There is also a program called the R.I. Urban Enterprise Equity Fund, established by the General Assembly last year to foster small businesses in urban sectors and eligible to applicants within state Enterprise Zones. There is a $5,000 minimum dollar limit per project and a maximum of $25,000, with funds to be used as equity investment to help capitalize small business in disadvantaged geographic and demographic sectors. Interest rates are fixed at 6 percent of the principal balance with a repayment term of 36 months.
Spokesperson Philomena Teixeira said only one loan has been given since the program started last year and that one reason for the slow growth is that the process requires another partner – the recipient must be approved by a bank or even a lender like the MIDC to apply to the fund for the equity it needs to seal the deal. For more information, call 222-2601.
