The start of a new year often finds us reflecting, expressing gratitude, and setting resolutions for the year. With the hustle and bustle of the holiday gift-giving season behind us, I’d like to challenge you to support small business owners throughout 2019. And while many resolutions are quickly abandoned and the convenience of shopping from one’s couch is consistently tempting, I hope you’ll join me in my resolution to support the mom-and-pop business owners who form the heart of our economy.
In spite of headlines dominated by behemoth businesses, enterprises with fewer than five employees constitute 92 percent of all companies in the United States. These micro-enterprises and other small businesses contributed $8.5 trillion to the economy in 2017, accounting for roughly half of the total GDP for our nation. Small businesses also employ 48 percent of working Americans nationwide and excel at creating high-quality jobs with greater access to benefits, paid leave, holidays, and flexible hours. Finally, entrepreneurship is a proven path to prosperity, especially for those who need it most. According to the Association for Enterprise Opportunity, business-owning households have a 148 percent higher median net worth than non-business-owners; for Latino households, it’s 307 percent higher and for African-American households, it’s 668 percent higher.
And yet women, minorities, and lower-income Americans face significant barriers to entrepreneurship and, subsequently, to realizing the American Dream. Minority-owned firms receive loan amounts 35 percent lower than non-minority firms, and only 2 percent of funding for startups goes to women business owners each year.
The consequences of this imbalance affect all of us, resulting in fewer jobs, reduced economic activity and a widening opportunity gap. If minority business owners obtained credit at the same rate as non-minorities, we’d have 1 million more businesses and 9.5 million more U.S. jobs. If women faced fewer barriers to starting or growing their businesses, they would be empowered to provide greater financial stability and opportunities for their families.
This would be good for everyone — entrepreneurs, employees and society at large. Indeed, the Goldwater Institute reports that for every 1 percent increase in entrepreneurship, there’s a 2 percent decline in the poverty rate. And with studies suggesting that stresses related to widening wealth gaps have a direct and negative impact on health — and even lead to increased mortality — we have a moral imperative to act.
The good news is that there’s an easy and proven solution that is both effective and intrinsic to the American Dream. It’s also inherently non-partisan and enlivens folks of many political persuasions. The solution is increasing access to safe and affordable credit to those locked out of traditional financing. Community Development Financial Institution (CDFI) lenders are nonprofit, mission-driven entities that provide loans to low- to moderate-income borrowers, with an emphasis on housing and small business ownership. The U.S. is home to 1,112 CDFIs that lent more than $5 billion in aggregate in 2016 to help level the playing field, to the benefit of us all.
Accion is one such lender. Serving the five-state region of Arizona, Colorado, Nevada, New Mexico, and Texas, Accion has lent more than $141.4 million to more than 9,196 small businesses since its inception in 1994. In Colorado since 2008, Accion has lent over $36.8 million to more than 1,948 small businesses, spurring an estimated 4,576 jobs in 150 communities across the state.
Accion client Yuneisi Oliva owns El Bohio Criollo Cuban Cuisine on the west side of metro Denver. When native Cubans Yuneisi and her husband, Greico Herrada, relocated to Colorado from Florida, there were many things they missed. One of their heartaches was the lack of Cuban food. Inspired to do something as a family, Yuneisi and her mother started selling homemade Cuban food at local festivals.
Expanding on her success, Yuneisi went in search of capital for a food truck but was turned down by a traditional lender due to insufficient income. Yuneisi was referred to Accion and was quickly approved for a small loan. The food truck was a success, and less than a year later, the financially savvy Yuneisi paid off her loan and began saving to open a restaurant. With the help of another small loan from Accion, Yuneisi opened El Bohio Criollo in 2016.
It’s these local success stories that make me proud to serve on the Accion Board of Directors. But the work of Accion and other CDFIs has significant, meaningful impact beyond our backyard. A recent longitudinal study of Accion’s clients found that 94 percent of borrowers surveyed were still in business three years after receiving their loans, 60 percent had increased sales, 57 percent had increased profits, and 40 percent had added jobs during the study period.
As we contemplate New Year’s resolutions, I hope you’ll join me in supporting local entrepreneurs like Yuneisi in 2019, who are the beating heart of our economy. I also encourage readers to learn more about small business lenders like Accion, who are helping small businesses thrive with unwavering commitment, year after year.
Edmond Johnson is president and CEO of Premier Manufacturing, Inc. in Frederick.
