In 2022, private lenders in Minnesota used secured Small Business Administration funds to build momentum for diversity assistance for businesses run by people of color, especially Black people.
Brian McDonald, regional director of the SBA’s Minnesota office, said loan amounts to Black small business owners have grown 307% since 2020, while the number of loans to that demographic has increased by 119% over the same period %.
“Minnesota’s lending community has been working hard to help underserved communities, especially during the pandemic and especially in the wake of the death of George Floyd,” MacDonald said.
Overall, SBA-backed guaranteed loan programs provided more than $956 million in loans to Minnesota small businesses in the fiscal year ended in September, down from a record $1.24 billion in 2021. In a record 2021, the SBA’s guaranteed loans disbursed 2,357 loans. MacDonald said the program was up nearly 21 percent compared to 2022, reflecting the SBA’s commitment to supporting more small businesses during the pandemic. of joint efforts.
Black-owned businesses received $30.1 million in SBA-backed loans in the most recent fiscal year, up from $25.5 million in 2021 and $7.4 million in 2020.
SBA loans to Asian and Pacific Islander-owned businesses and Hispanic-owned businesses have also increased over the past three fiscal years. SBA loans to Asian and Pacific Islander businesses increased from $31.3 million in 2020 to $73.5 million in 2021 and $74.9 million in 2020. For Hispanic businesses, that number increased from $21.7 million in 2020 to $23.6 million in 2021, but fell slightly to $22 million this fiscal year.
Of the businesses approved for loans by Arden Hills’ Amplio Economic Development Corp., nearly 14 percent of the loans went to minority businesses. That’s at least double the percentage of minority-owned businesses in Minnesota, said CEO Jonathan Sage-Martinson.
Amplio ranks third in FY 2022 in dollar value of SBA-backed loans at $53.6 million. The hotel and food and beverage businesses make up the bulk of Amplio’s portfolio, Sage-Martinson said. Amplio is one of five certified development companies in Minnesota to participate in the SBA 504 loan program, in which the SBA covers up to 40 percent of land, building, machinery and equipment loans.
“Ensuring that more people who have not traditionally had access to credit is our number one priority, and we are trying to make sure that those people also have access to credit,” Sage-Martinson said.
MacDonald said business owners of color receive a conservative percentage of their loans. In 2022 and 2021, the race of 18% and 24% of loan recipients, respectively, will be marked as undetermined. But he said a significant portion of the unidentified recipients could be business owners in underserved communities who deliberately concealed their race on their applications.
In 2020, nearly 30 percent of recipients fell into an unknown racial category.
Data provided by the SBA shows that federal agencies have significantly increased lending over the past five fiscal years. In fiscal year 2020, the program provided more than $763.5 million in loans to small businesses, up from $671.6 million in 2019 and $609.5 million in 2018.
Sage-Martinson said the increase is not only due to the SBA’s increased visibility, but also business owners looking to protect their real estate or expand during times of pandemic-driven economic uncertainty.
“The increased use of SBA loan products is a good sign because they are specifically aimed at helping small businesses looking to start or expand,” he said. “In that market in particular, without an SBA 504 offering, they often don’t have access to the capital they need to start a business or, for an existing business, buy real estate, so they don’t have better control over their future.”