he number of small businesses owned by Minnesotans of color is growing — and not by accident.
Honest conversations about inequality, including bank loans and job opportunities, took place after the police killing of George Floyd and the ensuing riots. They have prompted entities ranging from governments and banks to businesses and nonprofits to pledge money for all sorts of support programs.
This included promises to increase lending to small businesses run by people of color, who have routinely struggled to get traditional bank loans.
Partly because of changing demographics and partly because of opportunity, the percentage of Minnesota businesses owned by people of color fell from 6.3% in 2007 to 11% in 2017, according to the Census Bureau.
Updated census data is due out next month. But other government entities report that their numbers have grown significantly more over the past two years. The number of loans from the Small Business Administration (SBA) in Minnesota to black businesses increased by 250% from 2020 to 2021. Loans to Asian businesses increased by 112% and to Latin American businesses by 9%.
“It’s a pretty big pop,” Minnesota SBA District Manager Brian McDonald said.
The SBA has been aggressive in reaching out to businesses affected by the riots and the pandemic.
Loan officers explained how the Paycheck Protection Program and other SBA loans work and helped providers apply. The agency has sent bilingual loan officers to places such as Mercado Central, Midtown Global Market, Hmong Village Mall and the African Development Center.
They also used more “micro-loan partners” to secure loans at minority-owned businesses, which helped increase total SBA loans across all races in Minnesota by 63% in 2021. The organizations SBA’s nonprofit partners included groups such as Meda, the Neighborhood Development Center, the Hmong American Partnership, and the Minnesota American Indian Chamber of Commerce.
With the pandemic, riots, shipping delays, labor shortages, rising interest rates and inflation, “there have been a lot of headwinds for young entrepreneurs of color in the over the past two and a half years,” said Meda CEO Alfredo Martel. “But there are organizations like Meda. We have [all] we are determined to adapt our solutions to the size of the issues.”
Last year, Meda loaned $65 million to 702 businesses owned by people of color. It processed 300 PPP loans during the pandemic.
Across the Mississippi River in St. Paul, the Neighborhood Development Center has trained 5,000 low-income and diverse business owners since 1993 to run their own restaurants, daycares, bakeries, tax centers, auto repairs and other stores. in the working class. neighborhoods.
Warren McLean, president of the Minneapolis-based Northside Economic Opportunity Network (NEON), said many young entrepreneurs of color often need coaching as much as capital.
“We’re extremely active,” McLean said. “We go into the trenches with our customers.”
Take licensed therapist and social worker Anissa Keyes, for example.
After Keyes was denied loans by three banks, NEON’s Stephen Obayuwana showed him how to create proper profit and loss statements and other official business documents needed by banks to fund his growing business in Arubah Emotional Health.
Obayuwana then introduced her to the Community Reinvestment Fund, which funded Keyes’ first construction loan in 2017. When her customer load doubled and she needed more space to treat the 670 ailing customers of mental illness or trauma that the city sent him, CRF loaned him $3. million to buy and renovate the Camden Park State Bank at 42nd and Lyndale Avenues in north Minneapolis.
She closed the loan on November 30. The next day, the building’s largest tenant, Mykonos Coffee & Grill, announced that it would close in 30 days.
Panicked, Keyes turned again to NEON, who loaned her $41,000 at 2% interest so she could buy the restaurant’s equipment and find a new tenant. A new restaurant tenant, Heal Minneapolis, opens Thursday.
“NEON saved me,” Keyes said. “NEON made it possible to move forward with my project. I don’t know what would have happened without it.”
General Mills recently awarded NEON $300,000 to help fund BIPOC-owned food businesses in North Minneapolis.
Last year, the Otto Bremer Trust, Mortenson Construction and the Phillips Family Foundation awarded NEON $1.4 million so color developers could fund construction projects in Minneapolis. NEON officials plan to increase this loan pool to $5 million.
The SBA is also working with NEON and its partners to issue low-interest home loans to NEON’s growing list of customers. SBA’s involvement stretches dollars and helps NEON reach more people.
That’s the goal, McDonald said.
“Things have changed dramatically over the past few years for us as a pandemic relief agency,” McDonald said. “We were an agency that was at the forefront of [increasing] lend numbers” to minority businesses.