Strategies for Fostering Equitable Economic Growth in Central Texas Focus of October 12 Economic Perspectives

Ayleen Perez and Cloteal Haynes will discuss the PeopleFund Conference on Economic Opportunity on the October 12 edition of Economic Perspectives on KAZI 88.7 FM.  Perez is the communications and outreach manager of PeopleFund and Haynes is a long-time board member.  The Conference will be held October 24 at Austin Community College’s Eastview Campus.

Every year, the Conference unites community leaders, business owners, policy makers, developers, and artists to discuss the changes in the region and effective ways to further positive and equitable growth. From adult education and job opportunities to affordable housing options, the Conference addresses the key issues facing low- to moderate-income communities, and highlights strategies for creating opportunity for Central Texans. The program includes a regional and local economic snapshot, as well as breakout sessions addressing both community and business issues.

Ayleen Perez

Cloteal Haynes

The Conference will feature two keynote addresses.  The morning address will be delivered by Kenia Davalos, Los Angeles County Commissioner and Latino Business Advocate.  The afternoon keynote address will be delivered by President Obama’s newly appointed National Director of the U.S. Minority Business Development Agency, David Hinson.

PeopleFund provides affordable loans and counseling to ventures that create jobs, generate wealth, provide care for our children, and develop green technologies. It has invested over $20 million in underserved areas of Central Texas.

Ayleen Perez joined the PeopleFund staff in July 2009 as the Communications and Outreach Manager. In addition to community outreach and brand recognition, Ayleen’s responsibilities include planning and implementing public forums, such as our Conference on Economic Opportunity, that address critical economic needs in Central Texas. Born in Caracas, Venezuela but raised in Miami, Florida, Ayleen moved to Austin in November 2001 and has worked within the Latino community ever since.

Cloteal Haynes is managing partner of Hayes-Eaglin-Waters.  She has has over 30 years of planning and construction experience and has a masters degree from LBJ School of Public Affairs at The University of Texas at Austin.  Cloteal is a graduate of Leadership Austin and a board member of the Austin Black Contractors Association.

Best Sources for Small Business Loans Focus of August 3 Economic Perspectives

Even during these turbulent times, many financial institutions are still making small business loans.  Learn about some of the best sources for small business loans on the August 3 edition of Economic Perspectives on KAZI 88.7 FM.  The guests will be Theresa Lee, chief lending officer for the Texas Mezzanine Fund (TMF), Jaime Noyola, director of lending for the PeopleFund, Cindy Solano, Lead Lender Relations Specialist for the San Antonio District Office of the U.S. Small Business Administration, and Michelle Frith, outreach and marketing coordinator for the City of Austin Small Business Development Program (SBDP).

Texas Mezzanine Fund

Founded in 1998, TMF is a statewide community development financial institution that provides financing for businesses located in distressed areas, minority-owned businesses, and small businesses that create jobs for low and moderate-income people. It makes loans from $50,000 – $500,000 in tandem with other financial institutions and up to “stand alone” loans up to $300,000.  

PeopleFund

Since 1995 PeopleFund has strive ed to promote lasting economic vitality for low-income people by implementing strategies that create jobs, provide safe and affordable homes, and promote good economic policy decisions for communities.  It provides loans and revolving lines of credit from $20,000 – $200,000.

Small Business Administration

 The San Antonio District Office of the SBA provides financial assistance, business counseling and training and government contracting help to small businesses that are located in its area of operation which covers 55 counties in central and southwest Texas including the cities of Austin and San Antonio.  The SBA ’s most popular loan program is the 7 (a) program which may guaranty up to 90 perccent of a loan for a participating lender.  The maximum loan eligible for guaranty is $2 million.

City of Austin Small Business Development Program

The City of Austin SBDP provides counseling and assistance to small businesses.  It is hosting the 6th annual Meet the Lender Business Loan Fair on August 6 3 p.m. – 7 p.m. at the Palmer Events Center, 900 Barton Springs Rd.  This is an opportunity to meet, network, and learn from area lenders about the loan process for your small business.

Tips for Small Business Survival During the Recession

By Jaime Noyola, Director of Lending, PeopleFund

Undoubtedly the National Bureau of Economic Research’s announcement that the U.S. is and has been in a recession since December 2007

Jaime Noyola

comes as no surprise to most American’s. As Washington and Wall Street attempt to sort out a solution, there are many ways individual business can protect themselves from the effects of the down economy. Successful businesses will be those who can most quickly adapt to changes in the market and take advantage of the opportunities presented while minimizing operational risk. The following are some recommendations we are making to our clients.

1. Watch your accounts receivable. As credit tightens, many businesses are finding they no longer have access to the funding necessary. This can quickly lead to slow payment. Remember the squeaky wheel gets the grease. Stay vigilant with your clients and monitor your agings daily.

2. Evaluate your clients. It is more important now that ever before to evaluate each of your clients, existing and prospective. Many historically strong companies are now unable to pay their bills. Do not be one of the vendors left holding the bag. Just because a prospect has a good reputation or a client has an excellent repayment history, don’t assume that this will continue. Often times despite their best efforts, they maybe unable to make good on their commitments. Remember that when extending terms to clients you are not only following an industry practice, but you are extending credit. Evaluate it as such. Sales income does not pay expenses, cash received does.

3. Cash is king. During economic downturns, cash is the most important asset on your balance sheet. It allows companies to weather the storm. While companies need not hoard cash, this is a good time to evaluate expenses and purchases. It maybe prudent to delay large ticket items in order to maintain a larger reserve.

4. Don’t let assets become liabilities. In banking there is a phrase used often, “asset rich but cash poor”. While assets are better than liabilities, unutilized assets (those not making money) requiring significant supportive cash flow can quickly hinder more than help. Businesses must be cognizant of the true cost of holding an asset (maintenance, insurance, taxes, etc.) and determine if it is outweighed by the future benefits. Assets sold can always be repurchased when business increases, cash used to support unproductive assets are gone forever.

5. Keep creditors informed. If you should begin to see a negative impact on your finances, keep your creditors in the loop. DO NOT DISSAPPEAR. Unreturned calls are a red flag for creditors. All creditors are aware of the situation and most are willing to work with you. This is one area where it costs nothing to gain large dividends.

6. Indecision becomes decision. Indecision quickly leads to paralysis which can leave a company ill prepared to deal with the changing market. Rarely is staying the course the best plan of action in this type of economy. While making changes can be scary, idly awaiting the economy to get better is effectively a decision to do nothing. Agility is key. Obtain the best information available and continue to make decisions. Be ready to change directions at a moment’s notice.

The unknown is often scary. For many, this is the first dealing with a prolonged recession. It is important to remain positive and know that this period is just a part of a cycle. Inevitably the economy will expand again. Successful businesses will be those that change with the tide and survive until the next period of prosperity.

PeopleFund is a community development financial institution that specializes in lending to small, minority, and women-owned businesses in Austin and central Texas, especially those located in low to moderate income communities or  that will create jobs.  For more information on PeopleFund go to www.peoplefund.org.

Podcast Available: Predatory Lending Focus of December 15 Economic Perspectives

Leslie Parrish, Senior Researcher for the Center for Responsible Lending discussed trends in predatory lending on the December 15 edition of Economic Perspectives, 5:30 p.m. – 6 p.m. on KAZI 88.7 FM. Parrish recently spoke in Austin on payday lending trends at a forum sponsored by PeopleFund. The Center for Responsible Lending is a nonprofit, nonpartisan research and policy organization dedicated

Leslie Parrish

to protecting homeownership and family wealth by working to eliminate abusive financial practices.

To listen to the interview click here.

Predatory lending is a major problem in Texas, especially payday lending. According to an article published by Don Baylor in the April 2008 edition of the Texas Business Review, The Hidden Costs of Payday Lending , Texans borrow $2.5 billion a year from payday lenders with interest and fees of $500 million to $600 million.

As a Senior Researcher, Parrish analyzes a variety of consumer finance issues, such as payday lending, car title lending, and bank overdraft fees. Previously Parrish was a Senior Policy Analyst in the New America Foundation’s Asset Building program where she worked policies related to savings, asset limits, and financial education.

Business Financing During Tight Credit Times

By Hopeton Hay

Hopeton Hay

The recent upheavals in the banking system of the U.S. have made it much more difficult for small businesses, especially those without pristine personal and business credit and strong financial statements to obtain loans and lines of credit. News reports indicate a number of small business owners are having their lines of credit withdrawn or bank loans called by their financial institutions. But even with all the challenges, there are still sources of capital available and strategies entrepreneurs can employ to improve access to capital.

Tight Credit Times

According to the Federal Reserve System’s national summary of the October 2008 Senior Loan Officer Opinion Survey on Bank Lending Practices, 75 percent of respondents from domestic banks “indicated that they had tightened their lending standards on” commercial and industrial loans to small firms since July 2008. The survey also indicated that “85 percent of domestic banks reported that they had tightened their lending standards on commercial real estate loans over the past three months.”

Even the U.S. Small Business Administration (SBA), which in the past has had an increase in the number of loan guarantees approved during hard economic times according to a report by the U.S. Senate Committee on Small Business, has seen a historic decline in it guaranteed loans. The SBA’s Acting Administrator Sandy Baruah announced in October that the SBA approved 30,000 fewer government guaranteed loans through the SBA’s 7(a) program, declining from 99,604 in fiscal year 2007 to 69,434 in fiscal year 2008, the largest decline in one year in the history of the program. In response to the decline Baruah said in a press statement that “the SBA is holding meetings across the country to better understand how the agency can work with both lenders and small businesses to help them during these difficult times,”

Strategies to Improve Access to Capital

But with all the upheaval there are some things entrepreneurs can do to improve their access to capital

1. Identify alternatives to bank financing in Austin -While the news is bad on the banking front, community development financial institutions such as AccionTexas, BiGAustin, and PeopleFund provide financing to small businesses that don’t meet traditional bank underwriting guideliness. In addition factoring companies such as Working Capital Solutions can provide accounts receivable financing. Representaives from BiGAustin, PeopleFund, and Working Capital Solutions will be making presentations on their respective capital programs at the seminar, Building Black Wealth: Surviving and Thriving During the Financial Crisison Saturday, November 15, 10 a.m. -12:30 p.m. at BiGAustin, 1050 E. 11th, Suite 350. Email hopeton@econpers.com to make your reservation.
2. Cut business expenses – look to see what expenses you can cut and reductions you can obtain by negotiating with current suppliers of the products or services you purchase
3. Reduce personal debt to improve credit score- as small business owners your personal credit is your business credit, so the stronger your personal credit, the more attractive you are to lenders
4. Reduce personal cost of living – many lenders when evaluating your ability to repay the loan look at the availability of cash flow from the business and from the household. Reduced household expenses means more cash flow available to make loan payments
5. Improve the quality and reliability of your financial statements – Lenders need to have confidence that the business financial statements you provide them accurately reflect the condition and performance of your business and that you have a good understanding of them. It is these statements that provide the “proof” that your business has the financial structure and historical performance to meet key components of their underwriting guidelines. Knowing that the owners of the business understand the financial side of the business increases the lenders confidence in your ability to make good financial decisions. Also, having your financial statements prepared by a certified public accountant may increase the confidence the lenders have in the reliability of the financial statements.