Inclusive Small and Micro Business Lending Post-COVID

Thanks to our rock star line up of speakers and the over 130 registrants who made our 2021 Virtual MicroLenders Forum a success. This year was the first time that we opened the Forum up to our friends and colleagues outside California. Besides the great content and networking, CAMEO was excited to unveil our expanded and newly-branded CDFI Incubator, programs for young mission-based lenders that would like to strengthen their lending infrastructure, knowledge, and skills for greater impact and stronger portfolios. And we thank Wells Fargo, our lead sponsor, that helped make this event possible!

Administrator Isabella Casillas Guzman kicked us off with a summary of the SBA programs that helped the small business owners: PPP, EIDL (both targeted advances and loans), Restaurant Revitalization and Shuttered Venues programs, and efforts to streamline and expand the programs to meet the needs of the small businesses. For example, EIDL loans now can be used to pay off higher cost debt that businesses might have incurred when they needed quick cash to cover emergency COVID expenses. She talked about her philosophy for the SBA: customer-centric, technology forward, and equitable! And she even gave a shout out to CAMEO and our CDFI Incubator on our twitter feed.

.@CAMEOnetwork‘s work is vital to California’s economy. The expansion of their incubator program, funded in part by an SBA grant, will help lenders acquire the knowledge and expertise needed to help the smallest of small businesses thrive. Honored to be a part of this convo. https://t.co/BCuxfSFOcp

— Isabel Guzman (@SBAIsabel) September 29, 2021

Therese Meers, the Deputy Associate Administrator, Office of Capital Access, U.S. Small Business Administration, talked about how California fares compared to the rest of the country in the SBA Microloan program. Some examples include:

• The average microloan size in California was $23,000 in FY 2020.
• Our state’s SBA microloans had a 6.8% charge off rate during COVID.
• Late payments were 3.4% by number and 2.7% by dollar amount.

Ms. Meers also spoke about changes to the program, one of which CAMEO advocated for over many years – more flexibility in pre- and post-loan technical assistance. Now organizations can use 50% of their TA funds for pre-loan TA. She also mentioned new SBA direct lending, so we are looking forward to more details on that program. We look forward to continuing the conversation with Aya Ibrahim, of the National Economic Council, about how small businesses make decisions on their financing options much as a consumer would on a mortgage or a car loan. She also spoke about how the PPP was adjusted to facilitate sole prop applications, which was a big deal in many rural communities. Leila Roberts of NorCal SBDC chatted, “We worked with lots of happy, relieved clients!”

Then we moved onto state policy and talked about what’s on every lender’s mind these days – SSBCI 2.0 or the State Small Business Credit Initiative. The U.S. Treasury issued initial guidelines early this week (in time for the Forum ;) with more to come. The initial application is due on December 11, 2021 with the final application due in February of 2022. Scott Wu, who directs California’s IBank, explained that the state would invest in several different programs:

• existing State Loan Guarantee Program (IBank)
• existing Capital Access — I think this is CA Treasury’s Cal Cap program (CFPCA)
• existing Collateral Support program (CFPCA)

They are also looking at new venture capital programs and loan participation programs. Additionally, two additional pots of money are available that the state will apply for: $500 million for financial/credit TA and $2.5 billion for loans to serve underserved entrepreneurs. Wu will be holding stakeholder meetings and we will be sure to let you know when they are. We received twitter a shout out from the IBank as well!

We’re thrilled to be here, talking to mission-driven (#CDFI) lenders serving CA’s small/microbusinesses, focusing on underserved communities and underserved small/microbusiness owners. #MicroLendersForum #smallbusiness https://t.co/3OtorSIGAZ

— California IBank (@IBankCA) September 29, 2021

Download Scott’s presentation on the U.S. Treasury’s State Small Business Credit Initiative.

A big thanks goes to Megan Teare, Managing Director, Wells Fargo Community Lending and Investment, who introduced our CDFI Incubator as an investor and sponsor of the Forum.

Download Emily’s presentation on the CDFI Incubator.

Last but definitely not least, was Rocio Sanchez-Moyano, Senior Researcher, Federal Reserve Bank of San Francisco, who presented valuable information from the Federal Reserve Small Business Credit Survey on how different small businesses are faring with access to credit.

Her data for California Employer firms included:

• Currently 2/3 of are using large banks for financial services
• The top financial challenge in the past 12 months has been paying operating expenses
• Currently 2/3 are using personal funds to deal with financial challenges in their business

For additional info you can access the following reports:

• 2020 Small Business Credit Survey Reports: Arizona, California, and Hawaii
• 2021 Report on Firms Owned by People of Color
• 2021 Report on Employer Firms Based on the Small Business Credit Survey

Download Rocio’s presentation on the Small Business Credit Survey.

Agenda

10:00 am National and State Small Business Policy

11:15 am CDFI Incubator and Federal Reserve Small Business Credit Survey

12:30 pm Raffle and Networking

Raffle Prizes