Supporting Small Businesses is a BIG Deal
There is nothing small about small businesses. In fact, at First National Bank we think they’re a pretty big deal. That’s because the presence of local small businesses of all sizes and types provides the foundation for entire communities to succeed.
When an entrepreneur starts a business, they have the opportunity to increase their personal financial situation while also providing local goods and services and creating jobs for individuals in their community. When individuals can find employment that fits their skillset, they have the opportunity to live a prosperous life. When those same individuals have the ability to purchase goods and services locally, more of their hard-earned money supports their community’s local economy. The small businesses can then use their profits to grow their businesses and/or reinvest a portion into the community in the form of philanthropy. And, the city/state tax dollars collected help support local projects and services.
Small businesses make up a big portion of the US workforce, too. According to the US Small Business Administration, there are 30.2 million small businesses in the United States that employ 58.9 million, or 47.5% of US employees. It is estimated that in 2015 (the latest year studied), Small businesses created 1.9 million net new jobs too. There’s nothing small about those numbers. That’s why First National Bank is committed to supporting small businesses across all of the communities we serve so that they can continue to help communities prosper. In 2018 alone, we originated $750 million in new small business loans to help entrepreneurs start and grow their businesses.
However, it’s no secret that taking deposits and making loans is what banks do. It’s also no secret that the first step in obtaining a small business loan requires a basic understanding of how the banking system works and a good credit standing, among other things. For many aspiring entrepreneurs, particularly low-income entrepreneurs in underserved communities, these first steps are major deal breakers. Data shows that many low-income entrepreneurs in underserved communities fail to qualify for traditional bank financing. As a result, they either abandon their dream of owning a business, or they are forced to obtain more expensive loans that eat up their profits.1
Fortunately, there are multiple nonprofit organizations that can either provide the guidance to improve an individual’s credit profile, or even provide small business lending when banks are unable to due to regulation or risk concerns. First National Bank has a longstanding commitment to supporting these nonprofit organizations so that more individuals can realize their entrepreneurial dreams. Since 2015, we have invested nearly $15 million in community partners who are working to help local businesses get started and grow. As a result, they have been able to create more than 1,000 new businesses and create or retain more than 15,700 jobs.
The majority for First National Bank’s investments in nonprofit organizations that support small business are with Community Development Financial Institutions (CDFI) and Small Business Development Centers (SBDC).
CDFIs are private financial institutions that are 100% dedicated to delivering affordable lending to help low-income or disadvantaged populations. They specialize in providing loans to small businesses, affordable housing initiatives and nonprofit organizations that serve these populations but who may not qualify for traditional bank financing. The funding for CDFI loans comes from third party community investors such as the government, foundations, individuals and banks.
One example of our ongoing commitment to CDFIs is with the Nebraska Enterprise Fund (NEF). Recognizing the need for additional financing options for small businesses, First National Bank was a cofounder of NEF in 1994. Since their inception they have directly impacted 2,000 business and more than 5,100 jobs. Over the past three years alone, NEF has provided $10.24 million in loans to 246 small and micro businesses impacted 1,505 jobs and provided 3,415 one-to-one coaching and mentoring sessions to 2,288 participants.
Our investments in CDFI partnerships extend across our entire footprint. The Colorado Enterprise Fund provides business loans low-income entrepreneurs starting or operating a small business. To date, our support has helped them create more than 1,500 jobs and create 23 new businesses.
SBDCs are collective efforts among the Small Business Administration, a college or university, the private sector, and state and local governments. They generally provide business counseling, training and technical assistance. We support many SBDCs across our footprint, a couple of which are also located in Colorado.
The East Colorado SBDC provides consulting services to small businesses and startups in 13 Eastern Colorado counties. East Colorado SBDC, located in Weld County, helps existing and new businesses start and grow. Since 2016, our support has helped the organization create 40 new businesses and create/retain nearly 700 jobs.
The Larimer SBDC provides businesses with consulting, educational workshops, and connections to resources and services helpful to start or expand a business. Larimer SBDC helps Larimer County businesses start, grow and prosper. Since 2016, our support has helped the org create 76 new businesses and create/retain nearly 650 jobs.
We also have many unique partnerships aside from our CDFI and SBDC partnerships. One example is the 90-Day Accelerator Program offer by Fox Valley Entrepreneurship Center (FVEC) in Illinois. FVEC’s mission of making is making Fox Valley a place to start and grow thriving businesses that strive for excellence and innovation. The 90-Day Accelerator Program offers small businesses with intensive training, advisory services, strategic introductions, financial planning, intellectual property protection, marketing, sales and strategic/growth planning completely free of charge. The success of the program is proven through their results. In 2017 alone, they served five woman-owned, two minority-owned and one veteran-owned business - all with revenue less than $1MM. Of the 16 companies tracked in their two-year impact survey $6.4MM in annual revenue was maintained, nine fulltime jobs have been created and 78 fulltime jobs have been retained and they have helped raise $300,000 in capital.
No matter what their size, small businesses will always be a big deal. Whether it’s through providing small business loans or supporting nonprofit organizations who are working to help small businesses start and grow, First National Bank will remain committed to strengthening communities by supporting local entrepreneurs.
The articles in this blog are for informational purposes only and not intended to provide specific advice or recommendations. When making decisions about your financial situation, consult a financial professional for advice. Articles are not regularly updated, and information may become outdated.