Throughout the nation, the minority business community is enjoying an enormous boom. One bank and a couple of government agencies are hoping to help bring that boom to the Northeast Valley. Wells Fargo Bank recently joined forces with the Valley Economic Development Corp. and the U.S. Small Business Administration to turn a satellite small business development center in Pacoima into a full-service office. It is part of a drive by banks and agencies all over the state to both cash in on the boom and help it along. “The Pacoima office (officially known as the North East Valley Small Business Development Center) has been around since the early 1990s, in one incarnation or another, but always as a satellite of the VEDC,” explains Oscar Machado, a VEDC business consultant. “The key change now is that the SBDC at Pacoima has become more permanent and will get further support from the SBA.” Small business development centers, or SBDCs, are government-supported centers that help prospective and current entrepreneurs start or grow their businesses. According to a 1999 report by the Small Business Office of Advocacy, the number of minority-owned firms has increased 168 percent over the last decade, and the revenues they generate have jumped 343 percent in the same period. Still, minorities traditionally have had trouble obtaining the capital needed to grow their companies. Major financial institutions from BankOne which, together with the U.S. Hispanic Chamber of Commerce, has created a venture capital fund, to Bank of America, which has established national lending partnerships with La Raza and the NAACP have recognized the economic potential of this market segment. They have begun to craft targeted programs that combine loans and banking services with technical and business assistance. Among the available offerings in California are The Urban Enterprise Fast-Step program from Union Bank of California, and loan programs from Wells Fargo for blacks, Latinos and women. Wells Fargo has pledged to make $1 billion in small-business loans to blacks and $3 billion to Latinos over the next 10 years. The bank has partnered with the U.S. Hispanic Chamber of Commerce to launch the Latino Loan program, and with the Web site NetNoir.com to create the African-American Loan program. Through its Woman’s Loan Program, the bank has pledged to lend $10 billion to female entrepreneurs. “We think it’s very important for Wells Fargo Bank to develop partnerships and do outreach (in the local community) as it relates to business financial assistance and consulting,” explains Darrell Brown, Wells Fargo senior vice president and market president for the San Fernando Valley. The bank’s outreach efforts will include training for entrepreneurs in issues such as business management, investing, succession planning, virtual banking and the value of the Internet. Profit motive But this is not just about being a good corporate citizen, says Brown. It’s also about making money for the bank. Consequently, Wells Fargo doesn’t deviate from its traditional loan underwriting policies when reviewing candidates for the African-American and Latino loan programs. The bankers still look for “SAW”: stability, ability to repay and willingness to repay, says Brown. As with any other small-business loan, Wells Fargo carefully evaluates the business, its history, management, market competition, future earning potential and the character of its owners. “If they don’t quite meet some criteria, we might price the loan in such a way to minimize the risk to the bank, which might translate into higher interest rates,” adds Brown. “We try to customize and structure a loan that is unique to each individual, because there are so many variables to consider.” If a business falls outside its loan parameters, Brown says, Wells Fargo might refer the company to a partner, such as the VEDC, for technical assistance. Wells Fargo also aggressively uses all the financial resources available to try to make loans, says Brenda Dulan Ross, senior vice president of community development. This includes using SBA and California loan guarantee programs, microloans and even co-lending. Burbank entrepreneur Carlos Garcia knows how valuable the Wells Fargo effort can be. His firm, Garcia Research Associates Inc., conducts market research via focus groups with Latinos, blacks and other consumers. He has 12 full-time employees and about 60 part-timers. In 1999, tired of struggling to grow his business with a short-term line of credit, he began shopping for long-term financing. With a 10-year history of growth and about $1.5 million in annual sales, Garcia thought he would be a good loan candidate. After considering a number of banks, he narrowed the choice down to City National Bank and Wells Fargo. “Wells Fargo sort of approached us and said they wanted to support us. I said, ‘Let’s give it a try,’ but I was skeptical, because the bank had turned us down a few years ago,” remembers Garcia. “City National Bank also went at us with every bit of enthusiasm.” But after reviewing his application, which showed growth but no “paper” profitability, City National summarily dropped out with nothing more than a form rejection letter. “They didn’t even ask about the business or investigate it. They really didn’t give us the time of day after looking at the application,” says Garcia. Hands-on help In contrast and to his surprise, Wells Fargo took the entrepreneur under its wing. “(The loan officer) helped us mold our application and showed us how to organize the paperwork in such a way that would improve the likelihood of the loan being approved,” Garcia says. “He really went to bat for us. He was so dogged and determined to make it happen.” Garcia was able to obtain a $150,000 SBA-guaranteed loan. “We provide workshops dealing with different issues that businesses face,” explained Antonio Castillo, a business consultant with the Pacoima SBDC. “Most of the companies we serve don’t have access to big firms like Andersen Consulting.” According to Castillo, the free help offered by the SBDC ranges from information on starting a company to assistance dealing with issues such as human resources, marketing, sales, customer service, accounting and e-commerce. The center also has access to a number of SBA loan programs.
