Redlining – denying loans and other financial services on a discriminatory basis – is illegal, but that doesn’t mean its historical application isn’t still felt today or may still be happening.
Because of that reality, Rep. Esther Agbaje (DFL-Mpls) sponsors HF1999 that would appropriate $15 million from the General Fund in fiscal year 2022 for loans to small businesses with a goal of 75% of the funds going to minority-owned businesses and 25% to businesses owned by women, veterans, or persons with a substantial physical disability.
The House Workforce and Business Development Finance and Policy Committee held the bill over Monday for possible omnibus bill inclusion. The companion, SF1618, sponsored by Sen. Bobby Joe Champion (DFL-Mpls), awaits action by the Senate Jobs and Economic Growth Finance and Policy Committee.
Agbaje said a lack of access to capital, guidance, and markets creates barriers to growth and success for minority-owned businesses, and the COVID-19 pandemic has exacerbated these obstacles.
That, plus last summer’s civil unrest in Minneapolis means even well-established minority businesses will need help to recover and rebuild, she said.
She stressed, however, that funds would be available to businesses throughout the state.
The Metropolitan Economic Development Association would receive the $15 million grant, administered through the Department of Employment and Economic Development, and would require a 100% match from the Minnesota Inclusive Growth Fund, a coalition of six minority business support organizations.
“Our biggest challenge is gaining access to capital,” said T.J. Ticey, chief administration officer of TRI-Construction, a minority-owned general construction company that employs about 40 people.
The company needed financial help to gear up to assist in the rebuilding and repair needed in the aftermath of last summer’s civil unrest, he said, and got it through several financial organizations affiliated with MEDA.
Like many minority-owned businesses, Ticey said, “We do not have access to capital or those banking relationships like our mainstream competition.”
MEDA received $1,175,000 in fiscal years 2018 and 2019, respectively, and $400,000 in fiscal years 2020 and 2021 for statewide business development and assistance services with an emphasis on minority-owned businesses.