By Mary Alice Miller
Mercedes Narcisse is an NYC Council representative for the greater Canarsie area, but she was once a small business owner. “From my days as a small business owner, I’ve always understood the challenges and aspirations that entrepreneurs face every day. The essence of our city’s vibrancy and resilience lies in the hands of these very businesses that reflect our community’s spirit and ingenuity,” said Narcisse.
Years later, Narcisse learned that she could have obtained help to sustain her business from Community Development Financial Institutions (CDFIs). To help other small businesses, Narcisse became the Prime Sponsor of a bill that would require the Department of Small Business Services (SBS) to create a directory of local CDFIs and a web portal that would permit local CDFIs to publish information about the services they provide and the communities they serve.
The bill, passed in the City Council earlier this year and waiting for Mayor Adams’s signature, would also require the SBS to reach out to small businesses and minority and women-owned businesses to increase awareness of the services provided by local CDFIs and the types of loans they provide.
“By streamlining access to vital financial resources, we’re not just supporting the businesses; we’re fostering dreams, creating jobs, and reinforcing the city’s economic backbone. I’ve been on the other side, navigating the maze of resources and yearning for clarity,” Narcisse said. “This bill, at its core, is an endeavor to ensure no entrepreneur feels lost or unsupported.”
CDFIs are banks, credit unions, loan funds, microloan funds, or venture capital providers. CDFIs help families finance their first homes, support community residents starting businesses, and invest in local health centers, schools, or community centers. CDFIs strive to foster economic opportunity and revitalize neighborhoods, including low-income communities across the country, by providing access to basic financial services, affordable credit, and investment capital.
A report from the Center for an Urban Future titled “Bolstering Minority and Immigrant Owned Businesses by Scaling up CDFIs” gave an overview of the availability and depth of need for the services that CDFIs can provide for small businesses.
“Although New York City is home to dozens of excellent small business development organizations, the relative handful of nonprofit CDFIs across the five boroughs stand out for their unique ability to connect the city’s smallest, most vulnerable businesses with access to capital and technical assistance. CDFIs have built up trust with immigrant- and minority-owned businesses and are often the only place where first-time and smaller-scale entrepreneurs can get financing. Indeed, when thousands of minority- and immigrant-owned businesses in New York were unable to access the federal Paycheck Protection Program via traditional banks or take advantage of the city’s emergency grant program for small businesses, CDFIs filled the void, providing a financial lifeline to many at-risk firms.
“The problem is that CDFIs serve only a tiny fraction of the businesses and aspiring entrepreneurs who could benefit from affordable loans and business advising services. Our research shows that most nonprofit CDFIs in the city make no more than a few hundred loans each year, with some CDFIs closing less than two dozen. This is a drop in the bucket—and a striking missed opportunity in a city home to more than 64,500 minority-owned employer businesses and tens of thousands more micro-entrepreneurs, the majority of whom face enormous difficulty accessing capital.
“New York City has approximately 36 CDFIs that focus on small business lending only 10 to 12 provide a minimum of 50 loans per year and the maximum number of loans provided by the more active institutions is under 350 per year. With this bill, we are going to make sure all the small business owners in our community are made aware of the opportunity that CDFI is committed to do and provide.
“The Business Outreach Center Network (BOCNet), for example, made 187 new or refinanced loans in 2021. Brooklyn Cooperative Federal Credit Union, with branches in Bushwick and Bedford-Stuyvesant, makes about 100 new small business loans each year, lending only about $500,000 annually. Accompany Capital made 319 new small business loans in 2021, totaling $7.2 million. Greater Jamaica Development Corporation’s Southeast Queens Capital Access program makes just 10 to 30 small business loans in a typical year.
Overall, CDFIs account for just 0.4 percent of all small business debt lending in New York City annually. Although the reach of CDFIs is similarly limited in other parts of the country, data shows that New York’s CDFIs lend considerably less money than those in other major American cities. CDFIs made $138.3 million in loans to businesses in New York City’s five boroughs in 2017, compared to $210.3 million in Los Angeles County and $235.2 million in Cook County, Illinois, where Chicago is located.”
According to the NYS CDFI Coalition, New York State is served by more than 80 CDFIs. A search of the CDFI Fund database found several CDFI awardees based in Brooklyn: Brooklyn Cooperative Federal Credit Union, Brooklyn Alliance Capital, Inc., Brooklyn Economic Development Corporation, BOC Capital Corp., CAMBA Economic Development Corporation, Carver Federal Savings Bank, and Concord Federal Credit Union. Not all parts of Brooklyn are in these CDFIs catchment areas.
CDFIs can offer small businesses microloans of $10,000. Most common are loans between $25-50,000. Due to capacity, loans up to $250,000 are less common. Loans can be used for business-related purposes such as purchasing inventory or upgrading a small business’s physical space.
“Small business is the backbone of our community, yet we are not giving full support. As we continue to recover our economy following the Covid-19 pandemic, it is imperative that we support economic growth and provide the tools and resources necessary to support small businesses. I am looking forward to continuing to make sure that all small businesses in our city get the support that they need in order to stay in business. We cannot afford any more businesses being closed,” said Narcisse. “We have a profound obligation to reinvigorate the very heartbeat of our City, our small businesses. My bill is a commitment to ensure that as we rebuild, every entrepreneur, every local store, and every innovative start-up has the foundation and support they so rightly deserve. Let’s come together to champion the dreams of every New Yorker who aspires to build, innovate, and thrive.”