The District’s Department of Insurance, Securities and Banking program to procure more capital for Black enterprises is robust but Black business leaders say they know little about it.
DISB Commissioner Karima M. Woods recently talked about the DC BizCAP Program to the Informer.
While many entrepreneurs look to the D.C. Department of Small and Local Business Development (DSLBD) to deal with issues regarding capital, Woods wants them to know DISB can help, too.
Woods Explains DC BizCAP
Woods said DC BizCAP received its funding through the U.S. Department of Treasury under the State Small Business Credit Initiative, founded as a part of the Small Business Jobs Acts of 2010.
“Through this Act, DISB received $13 million in funding to create this program,” Woods said. “To administer the funds, DISB partners with private lenders to provide loan enhancements for small businesses that need additional support to obtain loans from private lending institutions.”
Woods said in fiscal year 2021, DC BizCAP provided $1,355,000 in support of five small businesses.
Woods knows minority businesses have problems accessing capital from traditional lenders such as banks. She said the Loan Participation Program (LPP) “is fully inclusive and provides subsidized interest rates to minority, Certified Business Enterprise and woman-owned businesses.”
“With this subsidy, DISB is able to reduce the interest charged on the loan support by half the rate the lender is charging,” she said.
A Jan. 22, 2018 article on Forbes Magazine’s website— “Why Minorities Have So Much Trouble Accessing Small Business Loans”—said minorities generally have lower net worth and/or lack of access. The article said banks are traditionally biased against applicants with less money to spare, partially because such applicants probably cannot offer collateral.
Woods said DC BizCAP doesn’t have a collateral requirement.
“Keep in mind, however, that the support offered through DC BizCAP is not a direct loan,” she said. “DISB partners with local lenders to provide loan enhancements. Consequently, while the department does not require collateral, in many cases, the lender may.”
Woods said a business doesn’t need to be in operation a set number of years to qualify for the program.
Essentially, Woods said, DC BizCAP has been designed to help entrepreneurs obtain new sources of capital in conjunction with traditional lenders such as banks.
“Under the rules and regulations of the program small business borrowers can use DC BizCAP funding to provide the additional support needed to obtain approvals from commercial lenders,” she said. “We offer collateral, will participate in loan requests and in some cases can co-invest to provide the access to capital to small businesses in need of funding support.”
Black Business Leaders Puzzled
While Woods praises her program, the details of DC BizCAP remain murky to many Blacks who are in business.
The Informer reached out to Kimberly Corbin, chief administrative and financial officer of the Greater Washington Urban League. Corbin said she doesn’t have sufficient knowledge about the program to comment. Amanda Stephenson, who owns The Fresh Food Factory in Ward 8 and has a reputation as a pro-Black small business activist, said she had not heard of DC BizCAP either.
However, Alfred Swailes, the owner of A&A Premium Paint Distributor, LLC in Northeast Washington and a leader of the D.C. Black Business Task Force, said he knows the program.
“I tried to get some funding through DC BizCAP working through the Latino Economic Development Center,” Swailes said. “I found the process to be cumbersome and it involves a lot of work and time. My application didn’t get processed fully.”
Swailes said it doesn’t surprise him that few know about the program.
“It hasn’t been well-publicized,” he said. “When Black business people want information on sources of capital that they can get with the help of the D.C. government, they go to DSLBD, not DISB.”