One of the effects of the COVID 19 pandemic is the KC Chamber’s Access to Capital initiative.
Though improvements were made in the second round of funding, the first round of Paycheck Protection Program funding starkly illustrated the difficulties minority-owned businesses face in getting financing for their companies: of the 4,677 Paycheck Protection Program (PPP) loans that helped Kansas City area businesses in the first round of PPP funding, only 24 went to African-American-owned firms and only 34 went to Hispanic-owned firms.
PPP dollars went through the banks, and too many diverse firms have no relationship with a bank. They’ve depended on funding from families, friends, savings, and, often their credit cards to get and keep their businesses going.
In response, the Chamber launched its Access to Capital initiative in 2020. The goal: to create new relationships between lenders and minority-business owners and increase lending opportunities for both.
Making connections
As part of the Access to Capital initiative, the Chamber has created a series of Lenders’ Forums, where minority-owned businesses made their pitches to area bankers. (Think ‘Shark Tank’ without the snark.) Since 2020, six Lenders Forums have been held with a total of 30 companies making their business case to potential funders. Three companies have received loans as a result, with several more securing lines of credit and plan to submit applications for loans.
The Chamber has also held three Capital Connections events – informal networking events held for minority business owners, developers, bankers, CDFIs, and technical assistance agencies, a casual way for those involved to get to know one another. The three sessions were held at 18th & Vine, the Guadalupe Center, and at the Police Athletic League in Kansas City, Kansas. 74 business owners, 22 lenders and 22 entrepreneurial support organizations (ESOs) participated.
Plans for more Lenders Forums and Capital Connections are in the works.
A little “behind the scenes”
The Chamber’s Access to Capital initiative was initially launched by the Chamber’s Public Policy Department. A few months ago, the initiative was moved to the leadership of the Chamber’s Small Business Director Vicky Kulikov.
“The Public Policy folks have done some great work with both the Lenders Forum, Capital Connections, and the Chamber’s Access to Capital Task Force,” Kulikov says. “They’ve put us in a good position to take it to the next level.” Since Kulikov is already working with small businesses, there are efficiencies to moving it under her purview.
While the Kansas City has a wealth of entrepreneurial support organizations, the task force discovered that they were often operating solo with few connections between them. “What we will be doing is mapping out the ESOs – those working in the access to capital space,” she says “We need to find out who those are and then bring them together for training, community, to share best practices and to form relationships and partnerships among themselves. Right now there are a lot of silos. We want to bring the ESOs together, enhance the Lenders Forum, and make sure the businesses are ready and prepared for their capital pitches.”
A grant from the Ewing Marion Kauffman Foundation will bolster the Chamber’s efforts. In addition, earlier this year, the KC Chamber assisted the Kauffman Foundation and LOCUS Impact Investing to launch a new Loan Loss Reserve Fund. They’ll work with approved lenders to provide loan loss reserve funds that support lending to entrepreneurs in low- and moderate-income neighborhoods, especially those who are Black, Indigenous, and people of color.
Changing the landscape will take time, Kulikov says. “There’s been a historical disconnect,” Kulikov says. “And while the lenders want to make progress, it’s going to take a lot of work. They’re ready to make changes but it will take awhile.”
For more information about the KC Chamber’s Access to Capital work, please contact Small Business Director Vicky Kulikov, (816) 374-5458 or email kulikov@kcchamber.com.