Everybody loves a story with a happy ending.
Unfortunately, when it comes to a state-sponsored program for providing Black-owned businesses with loan money, I don’t think we’re quite there yet.
I wrote a column about the Black Business Loan Program, administered by the state’s Department of Economic Opportunity, a couple of weeks ago.
The program, which has been around since 1984, is intended to provide access to capital for Black-owned businesses that might have trouble obtaining loans from other sources, for whatever reasons.
This could be a great benefit to businesses located along the Treasure Coast, but it hasn’t been working out that way.
Chauncelor Howell, president of the Treasure Coast Black Chamber of Commerce, said he wasn’t aware of any local businesses that had taken advantage of the program.
There could be a variety of explanations for this.
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The state only authorized two administrators to process loans through the program — the Florida A&M University Federal Credit Union and the Miami Bayside Foundation.
However, the Miami Bayside Foundation accepts loan applications only from businesses in three counties: Dade, Broward and Monroe.
That left the Florida A&M credit union as the only loan administrator with a statewide reach. But Florida A&M hadn’t been issuing loans through the program for months due to a contract dispute with the state.
I’m happy to report the contract dispute has apparently been resolved within the past few days, leaving Florida A&M free to accept loan applications from businesses in all 67 Florida counties.
That’s good news, no doubt.
However, other questions remain about the program’s effectiveness, even with Florida A&M in the mix.
The Department of Economic Opportunity issues an annual report that includes statistics about the Black Business Loan Program. According to the most recent report, which tracks the program’s history back to fiscal 2015, the Legislature has consistently appropriated more than $2.2 million annually to the program.
The program has loaned out more than $2.2 million in a single year only once over the past seven years. In the other years, the loan amounts have been less — sometimes, far less.
In fiscal 2015, for example, only 12 loans totaling $153,631 were issued.
In fiscal 2020, 18 loans were issued totaling $809,700. In fiscal 2019, 17 loans were issued, totaling $990,011.
Does that mean there weren’t other businesses out there that could have benefitted from the program during those years? I’m guessing that isn’t the case.
So where does that money go, if it’s not being used for loans?
“Any funding not expended within the appropriated fiscal year is retained by the administrator to make loans in subsequent fiscal years,” Morgan Jones, the state agency’s press secretary, wrote in response to an email inquiry.
But what happens to the funding when an administrator drops out of the program, or is inactive for a long period of time, as Florida A&M was while its contract issues were being worked out? Are the loan funds essentially out of circulation and unavailable to businesses that could benefit from them?
Just how difficult is it to become a loan administrator, anyway? The contract issues Florida A&M experienced and the relative lack of other institutions willing to serve in that role suggest there might be some bureaucratic hassles that have scared others away.
Although I’ve made repeated requests to interview someone at the Department of Economic Opportunity about those and other issues related to the program, my requests hadn’t been granted as of this writing.
Meanwhile, others have started to ask questions about the program, too.
Larry Lee, a former state House of Representatives member from Port St. Lucie, believes more loan administrators are needed, in different regions around the state. Lee suggested community colleges might administer the loans through their small business development offices.
“I believe strongly in the community college system,” Lee said. “I think that’s the key.”
Having only two authorized administrators statewide is fairly common, according to the state agency’s report. There were two administrators in five of the seven years covered in the report.
There were three administrators last year, but the Community Fund of North Miami-Dade withdrew from the program. There was only one administrator in the 2015 fiscal year.
Rep. Toby Overdorf, R-Palm City, also favors a more regional approach, with administrators assigned to different geographic areas.
“If we can’t get the money out, it’s not doing any good,” Overdorf said. “It’s an area that hasn’t had the attention it deserves.”
Overdorf said he expects the state to focus more attention on addressing the program’s shortcomings as Florida rebounds from economic doldrums caused by the COVID pandemic.
He also noted there are other resources available to Black-owned businesses, such as the Black Business Investment Fund, a private organization based in Orlando.
Sen. Gayle Harrell, R-Stuart, said states may soon have access to more federal funding earmarked for loans to Black-owned businesses. In the meantime, she invited more financial institutions to become loan administrators.
“There can be more, if more banks want to do that,” Harrell said. “I would encourage more banks and credit unions to become administrators.”
At least one bank with Treasure Coast ties has expressed an interest in serving as an administrator, but it remains to be seen if that interest will pan out.
Maybe someday, the Treasure Coast will have one or more locally based loan administrators for the program. That type of regional approach could benefit other parts of the state as well.
We’re just not there yet.
This column reflects the opinion of Blake Fontenay. Contact him via email at [email protected] or at 772-232-5424.
https://www.tcpalm.com/story/opinion/2022/04/08/local-banks-could-help-shore-up-black-business-loan-program-opinion/9499247002/