Black Business Owners See Progress, Challenges

Challenges, shackles, progress, opportunities.

It’s Black History Month and those descriptors capture just some of the sentiments that spring to mind, and to the heart, during moments of reflection on the “from whence” and the “what next.”

In researching this column I had occasion to speak with some very wise men, one of them a civil rights legend, all of whom invoked similar good news-bad news themes in describing the current state of affairs for African American-owned businesses.

The progress:

Nationally, the Small Business Administration, at the urging of Congress, has taken a significant step toward improving one of the most vexing and stifling problems facing minority entrepreneurs: lack of access to capital.

Efforts by the National Black Chamber of Commerce and other groups resulted in a nearly 35% increase in start-up loans to African American-owned businesses nationwide last year, including a nearly 10% increase in California, an official from the chamber said.

Locally, the San Fernando Valley Black Chamber of Commerce is returning to the fore this year, after a long hiatus. Led by a local civil rights leader, it’s armed with an aggressive agenda, a growing roster and a clear mandate.

“We’re looking at 2000 as being the year to increase not only the business base but also the employment base of the San Fernando Valley,” said the Rev. Zedar Broadous, who serves on the executive board of the newly reconstituted Black Chamber. “The organizational infrastructure for the African American community in the San Fernando Valley is rather light, and until we shore that up, not just from a business perspective, it’s going to be tough for African Americans.”

The challenges:

“Tough” is a word that applies to almost any effort to birth a business or keep an existing one breathing. For too many African American business owners, capital, the lifeblood of America’s economic ecosystem, is in short supply.

“The biggest challenges remain access to capital and access to markets,” said longtime civil rights activist Julian Bond, who will speak about “Race and Rights” at Soka University in Calabasas on Feb. 23.

While changing demographics and increasing integration have lowered the second hurdle, giving black business owners access to more customers across a broad racial spectrum, the first barrier remains.

“Access to capital of any kind, that has always been a problem for black entrepreneurs,” said Bond, board chairman of the National Assn. for the Advancement of Colored People. “It’s less of a problem today, but it’s a problem.”

Researchers from the Santa Monica-based Milken Institute estimate that the demand for capital in the minority business community is more than $144 billion a year. Only a fraction of that is now being met, experts say.

“The supply of capital, especially through the banks, for the minority business sector probably doesn’t come close to meeting the demand,” said Michael Harrington, research associate at the institute.

Most of the funding for black business continues to come from traditional financial institutions, such as banks, experts said. While venture capital is helping fuel the booming stock market, in general, African American entrepreneurs have not been able to tap into that source to any great degree.

“We’re getting very little of that money. I’d say it’s less than 1%,” said Harry C. Alford, an Oxnard native who serves as president and chief executive of the National Black Chamber.

To deal with the perpetually perplexing problem, the national organization, which represents more than 64,000 businesses, is moving on several different fronts. The group is working with traditional lenders, like Wells Fargo, which in 1998 announced a major initiative to funnel $1 billion in loans to African American-owned businesses over a 12-year period.

In addition, the chamber is taking at least partial credit for a hefty increase in loan guarantees from the SBA to African American-owned businesses.

“We’re very proud of that,” said Alford, whose organization testified before Congress on “the lack of outreach the SBA was performing in black communities throughout the country.”

John Tumpak, a spokesman for the local SBA office, said the increase in loan guarantees was the result of aggressive action on the part of the agency’s administrator, Aida Alvarez.

“She has set the agency in a direction to address the financial and economic development concerns of the nation’s new market community,” said Tumpak, defining “new markets” as minority and women-owned businesses.

Whoever gets the credit, the result was an additional $73 million in loan guarantees nationwide last year, to $347.7 million, the largest one-year jump in at least five years. That’s a fraction of the need, business experts said, but it’s a start.

“We have a long way to go but it’s starting to turn the tide,” said Alford, whose organization boasts 180 chapters in 35 states.

Bond noted that another intangible that tends to work against black business owners is access to deals and deal makers in the informal networking arena.

“In the general sense, black entrepreneurs don’t move in those circles: at the country clubs, at the kind of places where people meet over drinks,” he said. “If you consider that so much of business is done with business associates, the people [deal makers] are likely to see and interact with are people that look like themselves.”

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Broadous, who helped charter the San Fernando Valley black chamber three years ago, believes in the value of networking and plans to make that a central goal of the revived chapter.

“The African American small businessman tends not to have the ability to network, because they’re too busy trying to run their business,” said Broadous, who also serves as president of the Valley branch of the NAACP. “We’re trying to make sure minority businesses have a network that they feel comfortable with.

“People talk about networking, but very few people know how to have a net that works. We’re coming into that knowledge now.”

As near as Broadous can remember, the last time the Valley had a fully functioning black chamber was in the late 1980s. It faded from the scene when some business owners, who had joined with a specific set of expectations, lost interest.

This time, Broadous said, the organization is focusing on strengthening its package of member benefits before making a full-court press to boost the roster.

He added that the group plans to send out a survey later this year to try to get a better handle on how many African American-owned businesses are in the Valley. That ultimately will lead to a resource directory of black-owned firms.

“African American-owned businesses are so spread out in the Valley,” Broadous said. “There are so many African American-owned businesses in the Valley that we just don’t know about.”

A smile could be heard in his voice when he talked about the new chapter and its prospects for success over the long haul.

“We have many younger business entrepreneurs, age 25 to 40, who are looking for this and have the energy to move forward this type of organization,” he said. “They see the real need for coming together as a group of people as well as working with the established institutions in the San Fernando Valley.”

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Send a Black History Month greeting to a friend. Two neat sites I found, https://www.vintagegreetings.com/, co-founded by West Hills resident Salvatore Zoida, and https://www.egreetings.com.

Valley@Work runs each Tuesday. Karen Robinson-Jacobs can be reached at Karen.Robinson@latimes.com.