When all the banks say no
Many African-American business owners are underserved by banks. That's where the Black Business Investment Corp. steps in.
By Tom Zucco
Published August 5, 2007
It was the winter of 1989, and the timing was perfect. David Northern Jr. had worked at Ray Williams Funeral Home in Tampa since he came home after two tours of duty in Vietnam. The funeral home's owner wanted to retire and preferred that Northern and his friend and co-worker Jeffrey Rhodes take over the business.
All they had to do was come up with about $100,000.
Then things weren't so perfect.
"We talked to three or four banks and got turned down by all of them," Northern recalled. "It's hard for blacks to get a business loan at a bank.
"And when you keep getting turned down, it's disheartening. You hear the talk about pulling yourself up by your bootstraps, but good gosh."
They found one institution, however, that would help them get the money.
Rhodes and Northern turned to the Tampa Bay Black Business Investment Corp., a Tampa nonprofit that offers loans and financial counseling to African-American-owned businesses in Pinellas and Hillsborough counties.
The BBIC, which turns 20 this year, has written commercial loans totaling nearly $7-million so far. But the struggle continues: The nonprofit is facing budget cuts this year and a battle to maintain its share of funds from the state. And one of its core goals - persuading banks to put branches in low-income neighborhoods - remains a challenge.
While the city of Tampa has kept its funding for operational costs like rent and salary for staff, the city of St. Petersburg cut its funding from $21,200 last year to nothing this year. The city blames the cutbacks on the recent tax rollbacks.
The corporation currently has about $1-million to lend, the money coming largely from the state, with help from matching funds from banks.
This year, the Tampa Bay BBIC will get about $200,000 from the Legislature, but must raise about $40,000 from local banks.
That the BBIC even exists, said BBIC president Frances Wimberly, is cause for concern. By law, banks cannot discriminate when making loans.
But if the playing field were truly level, Wimberly said, if African-Americans could get business loans with the same relative frequency as whites, "there would be no need for the BBIC."
Feeding the problem, she said, is location. In many largely African-American communities such as the Midtown section of St. Petersburg, banks are hard to find. That means some people have to travel outside their neighborhood to do their banking.
"A lot of African-Americans don't feel comfortable going into a bank when they don't see anybody who looks like them," Wimberly said. "If they feel that way, I'll go in representing them."
Another frustration, Wimberly said, "is the fact that once we make a loan, we get burned at times."
Banks usually guarantee 50 percent of a loan, with BBIC picking up the rest. But if a borrower defaults, as a few have, the banks are far better capitalized to take the hit.
"The business owner sometimes doesn't see the need to pay us back," Wimberly said. "That hinders us from helping the next owner because it diminishes our little pot of money."
Local banks are well aware of the key role they play in community development, said Marjorie Burdine, a SunTrust vice president and the bank's community development manager for the Tampa Bay area.
"Having a local bank presence is a plus for anyone," Burdine said. The difficulty, she said, is that those who turn to the BBIC often don't meet the credit requirements banks want. So the BBIC helps them establish their credit and build relationships with banks.
"You have to take a chance sometimes," Burdine said. "There is not a high level of delinquency among BBIC loans. Not any more than anyone else. Even though you're taking more of a risk because of credit problems in the past, you have to have a degree of trust that someone is going to pay you back."
"We could do more," Wimberly said, "if more people knew about the organization."
With the money they received from the BBIC, Rhodes and Northern bought the funeral home in January 1990 and have owned it ever since. Ray Williams Funeral Home has grown from about 80 calls a year to nearly 250, and has just a few more payments left on the loan.
"The BBIC stuck their necks out for us," Northern said, "and then we worked hard so we could pay them back and so they could use us as a model.
"If they hadn't been around, we wouldn't own the business today."
Tom Zucco can be reached at zucco@sptimes.com or (727) 893-8247.
Learn more
The Tampa Bay Black Business Investment Corp. can be reached at (727) 826-5785, (813) 274-7925 or www.tampabaybbic.com.