A note from our editor, Elizabeth MacBride:
Banks can do well in a recession as interest rates rise, and one key to injecting growth back into the economy is unlocking some of that capital broadly into the hands of entrepreneurs. I sat in on a Capitol Hill roundtable with Sen. Amy Klobuchar (D.-Minn.)about barriers facing women and people of color who want to start business. The roundtable was organized by the Center for American Entrepreneurship. I wrote more about one reason – I think it’s the biggest reason — entrepreneurs can’t get bank loans. Few people realize that entrepreneurship in the United States is in a profound state of decline; one of the key reasons, I’ve argued, is that the small business financing system is broken.
Don Craven, head of the Commerce Department’s Minority Business Development Agency and Jerry Moran (R-Kansas) were also there for part of the roundtable. As I listened, I jotted down some of the concrete ideas that came out of the discussion; actionable ways to get money into the hands of American innovators. Here they are:
If you’re an employer, become the informal funder of your young employees’ business ideas, even if it’s just $1,000 or $5,000 — Charles Ashley III, founder of New Mexioo-based Cultivating Coders.
Restructure CRE incentives so that big banks find it easier to invest in small community-oriented VCs. Right now, the incentives encourage larger investments, rather than the under-$10 million sums that are likelier to create local jobs. — Kevin Allen, CEO of Denver-based New Community Fund.
Speed up the process for becoming a minority enterprise for government purchasing purposes — Oscar Pedroso, founder and CEO of Buffalo-based Thimble (It took his company four years).
Audit lenders to determine what percentage of their lendees that are enterprises owned by women or people of color were required to put up their homes as collateral, compared with enterprises owned by men — Iam Christian Tucker, President and CEO of New Orleans-based Integrated Logistical Support Inc.
This story and others on New Builders Dispatch are made possible by a sponsorship from the Ewing Marion Kauffman Foundation. The Ewing Marion Kauffman Foundation is a private, nonpartisan foundation that provides access to opportunities that help people achieve financial stability, upward mobility, and economic prosperity – regardless of race, gender, or geography. The Kansas City, Mo.-based foundation uses its grantmaking, research, programs, and initiatives to support the start and growth of new businesses, a more prepared workforce, and stronger communities. For more information, visit www.kauffman.org and connect with www.twitter.com/kauffmanfdn and www.facebook.com/kauffmanfdn.