Tag Archives: immigrants

Better Small Business Lending Requires Better Data

Stories and studies have long demonstrated disparities in small business lending, particularly for minority- and women-owned businesses, but we lack the data to quantify these disparities and hold lenders accountable. Small business data must be made public.

New York City is home to 1.12 million businesses, 95% of which have fewer than 10 employees; in fact, over 883,000 have no employees and are operated solely by the owner. As of 2012, 39% were women-owned businesses and 51% minority-owned.  Additionally, 48% of New York City small businesses are immigrant-owned, and in some neighborhoods, small businesses employ up to 42% of the neighborhood population. Yet, we know virtually nothing about their ability to access financing to start, maintain, and grow their businesses.

Access to capital is critical for these small businesses to grow, yet they continue to face barriers in accessing financing from traditional banks. As a result, they are often forced to borrow from friends and family; use personal savings; defer investment; or turn to less-regulated, higher cost, sometimes predatory online lenders.

For decades, the Home Mortgage Disclosure Act (HMDA) has helped reveal disparities and identify credit needs in residential home lending to low-income and minority people and communities. Unfortunately, we do not have a similar set of data for small business lending. Currently, only large banks are required to report small business lending, and the data they report is extremely limited, with little information about the size of the business and no other important details, such as the demographics of the owners, types and costs of loans, or denial rates. And small banks and non-banks don’t report at all. Section 1071 of Dodd Frank was designed to address this – to provide the public with a wide range of small business lending data, including business size, owner demographics, types of loans, and approval rates. Yet, before it has even gone into effect, lenders are opposing it. We urge the CFPB and Congress to ensure that the small business reporting mandated by Section 1071 is fully implemented. 

In lieu of comprehensive data, we now rely upon surveys and stories that document the disparities and the need for better data. None of these provide lender details. For years now, a set of Federal Reserve Boards has been conducting a study of small business credit needs to identify trends and barriers to financing. Not surprisingly, approval rates are lower for smaller businesses. In 2016, 60% of small businesses with revenue under $1 million were approved for loans and lines of credit at small banks and 45% at large banks, versus 78% and 72%, respectively, for large businesses. They also highlight the challenges businesses face in accessing financing from the online lenders. Small businesses were much more likely to use these lenders and all businesses reported them to be higher cost and less transparent than banks and CDFIs. Another study about the online lending market found that the average alternative loan carried an annual percentage rate (APR) of 94%. Among Hispanic borrowers, they found that their average monthly payment was more than 400% of their take-home pay. Section 1071 is a critical tool to expose the details of their lending, which is now completely hidden.

Several other studies have documented the challenges small businesses, particularly those that are women-owned and minority-owned, face in accessing credit. One study showed that just 5% of women-owned businesses use bank loans to start their businesses compared to 11% of male-owned businesses. If minorities owned businesses at the same rate as non-minorities, our country would have 1 million additional businesses and more than 9.5 million additional jobs.

ANHD members who work with small businesses tell similar stories of borrowers – particularly immigrant owned businesses and minority- and women-owned businesses – who struggle to access financing to start, maintain, and grow their businesses.

Without good data, we cannot effectively document disparities in the lending market or hold lenders accountable for disparate lending.  Without good data, we cannot identify unmet credit needs.  Comprehensive data such as the data collected under 1071 is essential to increasing access to credit for small businesses, particularly those in lower-income tracts and owned by lower-income people, people of color, and immigrants.

The CFPB is collecting comments on 1071 through September 14th.We must tell show our support! Contact ANHD if you’d like sample comments you can submit – it’s simple, fast, and important.

Jaime Weisberg, ANHD’s Senior Campaign Analyst

City Supports Quality Jobs with New Land Use Action, but Self Storage Industry Fights Back – Here’s Why We Have To Win

The City recently certified a land-use proposal to limit self-storage development in core industrial areas. This step forward is a significant victory for City Council members and community groups that care about a progressive industrial policy that promotes quality jobs and equitable economic development. But the self-storage industry association is pushing back, and we have to make sure that we keep the momentum to win this important step forward.

With speculation and rising real estate costs in industrial areas making it harder for manufacturing tenants to stay in the city, it is crucial for this proposal to move forward. Advocacy from communities and within the City Council ensured the Mayor would include use group reform as part of his 2015 Industrial Action Plan, and this same advocacy will ensure this commitment is fulfilled.

Here are 5 key facts to remember as the proposal moves forward:

1. Industrial and manufacturing jobs are good paying jobs.

The industrial and manufacturing sector has historically played a key role in creating a robust working middle class. While the sector has changed since its peak in the middle of the 20th century, wages remain strong. Average wages in the industrial sector are over $50,000 a year, significantly more than average wages in retail or food service. In a city where affordability is a constant challenge, retaining the kinds of jobs that allow people to stay in the city is crucial to an equitable economic development strategy.

2. The majority of industrial and manufacturing workers are immigrants and people of color.

In terms of who receives these wages, the demographic breakdown of the sector presents a diversity that mirrors New York City as a whole. With a majority of workers foreign-born and over 80% of workers being people of color, the industrial and manufacturing sector provides access to good paying jobs while often not requiring a college degree.

3. The proposed special permit begins tackling the broader displacement of good paying jobs from NYC.

A major challenge to the sector has been the commercialization of industrial-zoned land. The Council’s Engines of Opportunity report recognized the “continued pattern of speculation and warehousing…and lack of suitable zoning.” The overly broad use groups have allowed competing uses to displace industrial businesses and workers, leading to a loss of jobs. The Administration’s Industrial Action Plan aimed to address this challenge by limiting self-storage and hotel uses via a special permit.

4. There is considerable space available for self-storage.

The proposed special permit for self-storage only applies in “designated M-districts,” areas which largely overlap with the City’s existing core manufacturing areas – the Industrial Business Zones – as shown in the map on the left. In other words, new self-storage storage facilities will still be permitted as-of-right in C8 and M zones outside of the “designated M-districts”, as shown in the map on the right. Additionally—while the self-storage industry’s model is still rapidly evolving in terms of space needs—industrial and manufacturing businesses, supporting local supply networks, locate and operate in the city as a matter of necessity.

5. When space is preserved for manufacturing, those jobs stay in the city.

If manufacturers are less concerned about being priced out of their neighborhood, they are able to focus their attention back into running their business, whether through investing in new equipment or scaling up and hiring more employees. Manufacturers have been pushed out of the city due to rising real estate prices, but there has been continuous demand for affordable industrial and manufacturing space. The City has recognized this challenge, launching the non-profit Industrial Development Fund to address this gap and keep more jobs in the city.

Click here to download the Industrial Jobs Coalition Fact Sheet.

About the  Industrial Jobs Coalition (IJC)

United for Small Business NYC (USBNYC), a coalition convened by ANHD, supports Muslim bodega and grocery owners striking today in response to the “Muslim ban” executive order. USBNYC includes community organizations from across New York City fighting to protect New York’s small businesses and non-residential tenants from the threat of displacement, with a particular focus on owner-operated, low-income, minority and immigrant-run businesses that serve low-income, immigrant, and minority communities.

New York’s small businesses are what make this city special both nationally and worldwide. USBNYC is committed to ensuring that the city’s immigrant and minority owned businesses thrive. Small business displacement – whether through speculation, gentrification, harassment, or draconian immigration policy – is cultural displacement and undermines the fabric of New York’s neighborhoods. Immigrants and refugees make up almost half of all New York City small business owners, making them a fundamental part of the city’s unique diversity. In a time of great uncertainty and explicit attacks on Muslims and people of color across the country, it is vital to stand up for our communities and for our neighbors. In order to propel and show support for the City’s rich history of immigrant enterprise, we stand with Yemeni and Muslim small businesses today and every day.