Independent Banker - July 2021 - 77

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steeper climb to banking services
that some face that many of us took
for granted. "
The group of community bank
leaders decided that each bank would
contribute $250,000 to a joint fund
aimed at helping businesses owned
by local residents from marginalized
communities. " A million dollars means
a lot more than $250,000, " says Lorey,
president and CEO of $1.1 billionasset
Bank of Clarke County.
Harvard suggested the group
use the funds to provide interestfree
loans, an approach that
would help business owners who
felt that taking out a traditional
loan was too intimidating or
otherwise unattainable.
" There were people who did not
feel they could approach a bank, "
says Frazier, president and CEO of
$660 million-asset Bank of Charles
Town in Charles Town, W.Va. " It was
intimidating, and they did not see
people who looked like them. "
Breaking down barriers for
minority-owned businesses
As Harvard, Lorey, Frazier and
Rust developed the program, they
heard from community groups
about other barriers to applying
for loans. For a typical loan for an
early stage business, Harvard says,
the community bank would ask for
a five-year business plan. But for a
food truck coming out of a pandemic,
for example, the owner isn't looking
that far out, perhaps only to the next
year, he says. So, the leaders made
sure the fund had accessible business
plan requirements that allowed for
entrepreneurs with more streamlined
plans. The hope is that the fund will
be an entry point to developing fiveyear
plans, giving these businesses
access to larger loans in the future.
Their efforts have been appreciated.
" It is so rare and refreshing to have
" It takes more than an
announcement. It is being involved,
building that trust, working within
the communities you want to
engage [and] reaching out to the
communities first. "
-ALICE P. FRAZIER, BANK OF CHARLES TOWN
banks that are giving businesses of
color this opportunity, this first step
of establishing creditworthiness, "
says Susan Mitchell, president and
CEO of Guardians of Honor and
chair of economic development
for the Loudoun County branch
of the National Association of the
Advancement of Colored People
(NAACP). " This is a hand up, not
a handout. "
A " game changer " for businesses
The community banks developed
one common application for all
four markets. Next, they looked
at how to get the word out in their
communities. Luckily, they had
already engaged many customers
through their Paycheck Protection
Program (PPP) lending efforts.
" We needed to introduce this
in a way that was not just digital
marketing, " Harvard says. " We need
to go into the churches, physically go
into the neighborhoods, take away the
barriers, real or perceived. "
Jennifer Lassiter Smith, director
of U.S. Programs for INMED USA,
an international humanitarian
development organization, agrees
with this approach. Smith, who is
based in Sterling, Va., says the Latinx
people who take INMED's English
and computer classes don't tend to
get information from social media.
WhatsApp groups and word of mouth
are essential methods for what she
calls " the trust factor. "
" If we can get people who don't
normally tend to apply for these
loans, it is going to be a game
changer, " Smith says.
So far, the team has heard
from many interested businesses,
including food trucks, nail and
beauty salons, and small farms.
Together, the community banks have
closed four loans and another eight
are in the works. Lorey estimates
that about $395,000 in loans are in
the pipeline.
The team believes they are building
a model that other community banks
can replicate. To do so, community
banks should first reach out to
minority-owned businesses and
community groups in their area
about their needs.
" We learned that it takes more than
an announcement, " Frazier says. " It
is being involved, building that trust,
working within the communities you
want to engage [and] reaching out to
the communities first. "
Margaret Littman is a writer
in Tennessee.
independentbanker.org Q 77
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Independent Banker - July 2021

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