Communities could benefit from a statewide boost in business development funds

Frank Brown said that he wouldn’t have been able to get started in business – much less hire six employees at living wages – without the Neighborhood Development Center.

He struggled to get a loan to buy Minuteman Press Uptown, despite an excellent credit score and years of experience in the industry, because of a criminal record. But now, Brown is able to give back to the community and hire other people struggling to find well-paying jobs because of their pasts, he said.

“We need this one-horse institution,” he said, quoting Jimmy Stewart’s character in the movie “It’s a Wonderful Life.”

HF786, sponsored by Rep. Rena Moran (DFL-St. Paul), would appropriate $2.6 million during the upcoming biennium for grants to the Neighborhood Development Center.

Rep. Rena Moran

It was held over Thursday for possible inclusion in the House Jobs and Economic Development Finance Division omnibus bill.

A companion, SF797, is sponsored by Sen. Karin Housley (R-St. Marys Point) and awaits action by the Senate Jobs and Economic Growth Finance and Policy Committee.

The funding would provide a wide range of small-business programming in both Greater Minnesota and the metro area.

“It’s a model that can be replicated and it works,” Moran said.

The Neighborhood Development Center identifies potential entrepreneurs in low-income and minority communities, then provides them with education, helps them secure funding, and connects them with long-term support that can include legal, accounting, and marketing services as well as continued training, CEO Mihailo “Mike” Temali said.

Staff doesn’t do the work for entrepreneurs, but helps them accomplish it on their own and provides support if there’s a mistake, he said.

Eddie Wu, owner of Cook St. Paul, said financial support and training from the center allowed him to get the restaurant through many tough times and provided him with the business skills he needed to run a business.

“Every day that I’m here, it’s because of them, and that is not hyperbole,” he said.

According to a 2016 study, the Neighborhood Development Center has helped create about 650 existing businesses, which have generated 3,000 jobs, at a program cost around $4,900 per job and $28,000 for each business. The center also tries to “cluster entrepreneurs,” allowing individuals to lift up their community as a whole, Temali said.

Businesses that have worked with the organization last for an average of 10 years, more than twice the national average, Moran said.

The organization provides a clear way to address racial disparities in the state, with a focus on low-income and minority entrepreneurs, she said.

Robert Aitken, executive director of Leech Lake Financial Services, said that the model has paved the way for his organization’s first loan to an entrepreneur, expected to close this spring, which would bring a reliable mechanic to the community.

“That’s where we’re at,” he said. “We need our people to keep the money local instead of going to another community for something simple like getting an oil change or new tires.”