17 Aug Capital Access Fund gives minority businesses more access to capital
CLEVELAND, Ohio — Waverly Willis opened his first barbershop on the West Side nearly 10 years ago and his second location four years ago. But when he decided it was time to buy a building instead of renting, his bank turned him down.
“They said my debt-to-income ratio wasn’t where they needed it to be,” Willis said.
That was four years ago. Still, when a representative at the Urban League encouraged him to apply for a loan through a seven-month-old program called Capital Access Fund of Greater Cleveland, he was skeptical.
Similar to the bank, he had a relationships with people in the organization and he wasn’t up for another disappointment. Instead he found that the $8 million initiative set up to help African American and other minority business owners, was a program that was serious about helping small-business owners thrive.
So far, Capital Access Fund has funded 15 businesses for a total of $2.3 million since its launch on Dec. 1, 2016. The small business lending pilot program is a unique collaborative of local and national organizations and institutions that have come together to assist businesses in creating and maintaining jobs for residents and building community wealth.
“I was reluctant to going through the process again. The bank experience left a real bad taste in my mouth. I had a relationship with the Urban League, from taking business classes, and a decent credit score, and they were able to fund it.
“They walked me through the whole process, and I got a great rate on $105,000 on a long-term loan,” Willis said of the loan he received in May. “Even with the first few years, my payment is well over half of my rent was for the first four years … and even when it goes up it will still be $250 less than what I was paying for rent.”
Optima Lender Services LLC, one of the few minority-owned national title and settlement companies in the country, is among one of the loan recipients. The company received a loan earlier this year as they prepared to add another regional financial institution as a client.
“Capital Access Fund was willing to look at things differently and find a way to best match our loan needs,” said Monique Winston, CEO at Optima.
The Warrensville Heights-based company is licensed to issue title insurance in 32 states, and helps banks, credit unions, and mortgage lenders meet their goals and objectives for supplier-diversity.
Winston said getting a loan from the Capital Access Fund meant a lot considering the business is very young compared to its national competitors. In her experience, she said, traditional financing vehicles do not always afford the opportunity to fully understand the intricacies of a specific industry. For instance, her business does not typically fit within the standard cookie-cutter approach that many institutions follow.
“The Capital Access Fund took time to look beyond a checklist. They were able to visit us on site and take a deeper dive into our particular situation. For example, it is normal for a lender to review receivables; however, we close real estate transactions and our revenue structure is different. We are paid as part of transaction, 99 percent of the time,” she explained.
“Invoicing is rare,” she said. “In addition to our revenue structure, the company’s launch was nontraditional, so in many aspects we don’t fit into the traditional banking model.”
It’s important to determine what loan products are conducive to your business, Winston said, adding that she’s grateful that people working with the new fund were willing to take time to get to know the business in order to figure out how to fund it in a way that is mutually beneficial.
Organizations involved in the effort include National Development Council (NDC), National Urban League’s Urban Empowerment Fund (NUL-UEF), Cuyahoga County, Morgan Stanley and the Key Bank Foundation, among others.
Besides access to capital, the program offers pre- and post-loan counseling to ensure the success of borrowers.
The goal of the $8 million loan fund is to offer 50 loans and create a minimum of 300 jobs in three years.
Urban Kutz has been in business for nearly seven years employing nine independent barbers. The first location is at 111th and Detroit. Now, Willis plans to open a salon in the building he’s buying at 4491 Pearl Road, by the end of the year. Urban Kutz is a member of TUBA (The Urban Barber Association), offering basic health screening on site and a library for youth being serviced.
“Old Brooklyn is a great location,” he said. “It’s definitely an up-and- coming neighborhood.”