Tips on Accessing Capital as an Under-resourced Small Business Owner

Interview with Peter E. Jackson, MBA, Vice President, Sr. Business Consultant at J.P. Morgan Chase

By Josaline Cuesta, California Program Director, Small Business Majority

Entrepreneurship is essential to a thriving and equitable economy. Yet, too many of our smallest businesses—especially those owned by people of color, women, rural business owners, and other under-resourced communities—face significant hurdles in accessing capital from banks and other traditional financial institutions.

Small Business Majority prides itself on partnering with experts in the field to mitigate the unnecessary impacts of inequitable access to capital and help to break down systematic barriers.

Peter E. Jackson, MBA is Vice President, Sr. Business Consultant at J.P. Morgan Chase. His work in California has been integral to creating pathways for minority and women entrepreneurs to access capital successfully. I sat down with Peter for a Q&A to discuss his experiences, share his expertise and tips, and learn more about expanded opportunities for capital in a unique community.

Do you believe there is a barrier to accessing responsible capital for small business owners? If yes, do you believe that a certain group of small business owners are more susceptible to experiencing challenges? Why?

From where I sit, one of the biggest hurdles facing minority small businesses is access to financial education. Many Black and Latino business owners we work with through the Chase mentorship program, believe it or not, cite access to education as their top need, e.g., understanding working capital, credit readiness, financial planning, managing debt and cash flow, etc. Working knowledge of these principles is the foundation of building a small business. That means having your bookkeeping and financial operations to help you make your best case when seeking funding/capital from any lender. Not having this in order may delay any financing for your business. There are also questions to ask yourself, e.g. ‘Am I in a healthy financial position to pay back a loan or is a bank loan the right financing option for my business needs at this time?’ This is where a banking relationship or banker can come in handy.

Often, minority entrepreneurs may not have had the best relationship with a bank or may not have had a parent or close individual to seek guidance from related to entrepreneurship – the list goes on. The pandemic exacerbated many of the underlying racial disparities that already existed in the U.S., including the banking system. As a firm, we recognize these challenges and do everything we can to address them.

In 2020, JPMorgan Chase announced a $30 billion racial equity commitment to create an inclusive economic recovery and help Black and Latino small businesses, families, and local communities create and sustain generational wealth. We’re creating the infrastructure to help more minority-owned businesses grow and recover through new programs, products, and hiring. This service is free, and business owners do not have to be Chase customers to receive coaching and mentorship.

Information about the JP Morgan Chase Minority Owned – Business Program is available at: https://www.chase.com/es/business/minority-businesses

What stories have you heard about the ease of accessing capital for small business owners? Can you please share a few typical challenges and some success stories? Did any success stories involve innovation? Did owners have to think outside the box to gain continued access to capital?

Yes, thinking out of the box is an everyday part of what we as Sr. Business Consultants do. Every business owner comes from a different place financially and operates their business differently. An example of this was a local smoothie bar owned by a Latina entrepreneur in Fontana, California. I discussed her goals and challenges, and she needed to obtain a small working capital loan to hire a part-time employee to extend her business hours and add signage. I helped her calculate and understand her break-even to determine the right price she needed to charge for her product to be able to pay for an additional employee and add a sign to the front of her store. This was important because she established new sales goals to drive more revenue. Also, the loan underwriter could see her business now had sufficient income capacity to borrow and pay back a loan by charging enough to support the loan payment. Business owners often borrow without a plan to demonstrate they can repay the loan or without consulting their CPA to ensure they leave enough money in their business to borrow. Part of my role is to help small business owners understand their business finances and how to leverage them to scale and grow their businesses.

What are some ways to increase small business funding to expand access to capital?

From JPMorgan Chase’s standpoint, here’s what we are doing to expand access to capital for underrepresented communities. We have committed $396 million (page 23-25) in small business philanthropy to grow Black, Hispanic and women-owned small businesses and create a more inclusive recovery from the COVID-19 pandemic, including:

• ~$42.5 million to expand the Entrepreneurs of Color Fund (EOCF) in more U.S. cities, the program will offer low-cost loans and technical assistance to small businesses through LISC and CFDI network
• Philanthropic investments to build the capacity of diverse-led nonprofits across the globe and support the signature Ascend Program
• Policy solutions through the JPMorgan Chase Policy Center to improve U.S. Small Business Administration (SBA) program to better meet the needs of minority- and women-owned small businesses.

Within Business Banking, we plan to provide an additional 15,000 loans -totaling $2 billion- to small businesses in majority-Black, -Hispanic and Latino communities over the next five years. To further expand access to credit to minority business owners, we’re:

• Exploring targeted adjustments to how the firm evaluates credit applications
• Introducing new products, including a digital lending platform, to better support the needs of small Black, Hispanic and Latino-owned businesses seeking quick access to capital.

What are some of your recommended, trusted community resources or training opportunities within the Inland Empire that will help with understanding ways to access legitimate capital?

• Mentorship, dedicated coaching, and education are critical to helping people get credit ready. Look into Chase’s 1:1 coaching for minority entrepreneurs across 21 U.S. cities, where they work with a senior business consultant to help them scale. Visit www.chase.com/businessconsultant to learn more.
• Visit the Inland Empire Center for Entrepreneurship (IECE), an SBDC program within California State University, San Bernardino, which delivers a wide range of programs, technical assistance, and services to existing small business owners or aspiring entrepreneurs in the community. Every state has a small business development center offered through U.S. SBA and colleges/universities.
• Lastly, I think AmPac, UCR, and the University of La Verne also have some of the strongest community resources that speak to access to capital, readiness, training, grant programs, microfinancing, etc.

Peter will join other financial experts for a Small Business Majority hosted event on September 14, 5:30pm PT. “Breaking Barriers: Accessing capital as women business owners of color” is a free event to learn tips for remaining resilient in business and how to navigate non-predatory debt financing options that will help grow or strengthen your woman-owned small business to help build generational wealth.

Register for this event here: https://www.eventbrite.com/e/breaking-barriers-accessing-capital-as-women-business-owners-of-color-registration-393175316957