Technology has streamlined processes in every industry, including the finance sector where automation and artificial intelligence have changed the game in how business is conducted. Determining financing strategies, applying for loans and signing documents can all happen without ever shaking the hand of a financial professional.
However, a shifting ideology in the banking industry is helping existing and hopeful minority-business owners with more than just financial assistance. Banks are returning to the basics, inviting face-to-face relationships and serving as counselors in a proactive measure that will eventually produce a return on investment.
“When business owners go to online portals and submit their information, often they get either a ‘yes’ or ‘no.’ But if they are working with a banker, they are getting feedback on the things that they need to know. It’s become less of a “yes or no” transaction, and more of making sure that business is set up for years down the road,” said Marquisha Bridgeman, vice president of community and business banking partnerships for Merchants Bank.
Building Relationships
Bridgeman said conversations with owners of minority business enterprises (MBEs), women business enterprises (WBEs) and disadvantaged business enterprises (DBEs) have become more intentional.
“In the last few years especially, banks have been focused a lot more on the relationships. As banks partner with more community organizations that do offer funding for these types of businesses, it allows us to provide support that is more holistic and people are being guided through a number of opportunities,” she said. “Everyone is doing a better job of working in partnership with each other to help support the existing structure and resources so that minorities are successful.”
In addition to some funding opportunities with Merchants Bank, Bridgeman said she can work with new small business owners with unique community solutions. The bank partners with the Small Business Administration for loans that are structured for minority business owners. Other funding opportunities include community development financial institutions (CDFI) such as Bankable, Intend Indiana’s Build Fund, LISC Indianapolis, and other organizations such as chambers of commerce.
Lynn Kerber, vice president, chief commercial banking officer of Horizon Bank, said she also finds incredible value in community banks offering consultative support. It is a win for the lender and a win for the minority business owner. In addition to Horizon Bank’s conventional loan offerings for minority businesses, including commercial real estate mortgages, working capital loans and equipment loans and leases, Horizon is a preferred lender with the SBA, offering enhanced credit through various SBA programs, and also participates in the USDA agricultural and business programs.
“Our lenders and SBA specialists go above and beyond and will meet one-on-one with business owners to review their business plans, assess needs, discuss opportunities, and create customized financing and treasury management plans tailored to each customer’s unique requirements,” said Kerber. “They understand various loan programs and offer tailored support, which is especially beneficial for minority, women-owned, and disadvantaged businesses.”
Beyond the loan programs, Kerber said Horizon also works with numerous community, regional, and state economic development organizations to offer access to capital, training, and expertise. Some of those organizations include Indiana Statewide Certified Development Corporation, Cambridge Capital, SCORE, and local municipalities, which often provide grants and specialized programs such as façade improvement financing at a reduced interest rate.
To add to the personalized support, some banks are creating new loan programs targeting minority- and women-owned businesses that are struggling with traditional financing. Monica Rubio, community lending market executive, vice president and NWI market president for Old National Bank said the institution saw a need to offer more support to these types of businesses. Old National’s Empowerment Small Business Loan Program, which launched in 2023, provides funding for qualified individuals who may have been denied traditional funding due to lower credit scores or unavailable collateral. Rubio said the program has been well-received with $45 million in approved loans in its first year.
“The Empowerment program expands access to capital for minority- and women-owned small businesses that may not normally qualify for credit under traditional underwriting guidelines,” said Rubio. “We’re removing barriers that limit access to financing for businesses in underserved communities.”
Proactive Approaches
In addition to providing direction about available internal and external loan opportunities, Bridgeman said bankers are also taking the time to guide business owners through grant and certification application processes. It can be an overwhelming process, she noted, adding that at times, there are just as many requirements for a grant application as there are for a loan application. She said the focus on forming partnerships early on with small business owners will benefit not only the entrepreneur but also the bank when a successful business owner returns for more financial services in the future. The trickle-down effects of an established relationship will also eventually benefit the community as a whole, she said.
“Because of the entrepreneurial spirit we have as a bank, we can find more creative solutions to solve problems,” said Kerber. “I don’t think businesses really expect that level of support.”