Spurring the Growth of Minority-Owned Businesses
Many business owners lack access to capital for startup and expansion initiatives, and minority-owned businesses may experience unique challenges securing traditional financing to support their growth goals. Non-whites make up 12 percent of Wisconsin’s population, but just 6 percent of businesses in the state are minority-owned.
The Wisconsin Economic Development Corporation’s (WEDC’s) Minority Business Development Revolving Loan Fund aims to enhance business health in Wisconsin’s minority communities, bolstering job creation and retention and spurring the creation of new minority-owned businesses.
“Wisconsin can’t afford to be missing out on minority businesses’ potential contributions to the economy,” says WEDC Minority Business Development Manager Seyoum Mengesha. “In speaking with minority business owners around the state, we learned that there was a need for more assistance to help their businesses thrive in Wisconsin. We knew we needed to develop a program that helped these individuals successfully launch or expand their businesses here.”
WEDC has budgeted $600,000 for loans and technical assistance provisions through the fund in the current fiscal year. These loans and assistance are provided through the minority chambers of commerce with which WEDC partners. Loan amounts generally range from $5,000 to $25,000 per company, and businesses receiving loans typically have fewer than 25 employees. Some program funds also are available for use by the chambers to cover administrative costs, ensuring that the chambers have the capacity to provide quality assistance to the communities they serve.
“These loan funds function like a down payment on the rebuilding of the urban small business core, which is needed to revitalize minority communities and spur small business diversity,” says Lee Swindall, WEDC vice president of business and industry development. “In addition, they serve as the engine to attract additional capital and business investment from commercial banks to support these efforts.”
Since the former Wisconsin Department of Commerce launched the initiative in 2003, the number of participating partners has steadily increased. The initiative was launched in partnership with the American Indian Chamber of Commerce of Wisconsin and its financing arm, First American Capital Corp. In 2007, the Hmong Chamber of Commerce joined the program, followed by the African American Chamber of Commerce in 2013. In 2014, the Hispanic Chamber of Commerce became the latest organization to join.
Charles Vang, executive director of the Hmong Wisconsin Chamber of Commerce, says working with partner organizations is an essential feature of the program’s effectiveness. “The most efficient way to improve access to capital in the community is to empower the organization that knows its people and understands their challenges to serve them,” says Vang.
AP International Inc., an herbal supplement company based in Wausau, is among the companies that have benefited from the program. The company received a revolving loan through the Hmong Chamber to support production and increase sales. “The revolving loan funds helped my business extensively,” says AP International Inc. President Xiong Lo. “Without the funds, we would not have been able to afford a label machine and buy additional supplies to increase inventory and support our sales goals.”