Patrick Duggan is the Director of Marketing and Communications for Pacific Community Ventures where he drives all of PCV's marketing initiatives across the organization's many programs. We recently checked in to get his advice on financial resources for small businesses. Here's what he had to say: Tell us about Pacific Community Ventures. What do you do? Pacific Community Ventures is a nonprofit social enterprise that engages small businesses, investors, and policymakers to build an economy that works for everyone.
We achieve our mission in two ways. First, we provide small businesses with access to the capital and mentorship they need to grow and create quality jobs for working people in low- and middle-income communities. Second, we work with impact investors to help define, measure and communicate the social outcomes of their investments to stimulate more investment in underserved communities.
Why are you passionate about empowering small business owners and entrepreneurs? While our economy's improved on paper these past six years, most of us know that's not the whole story. During the last few years, quality job creation has been anemic, and way too many workers have jobs that don't allow them to support themselves and their families. Since the end of the Great Recession, 12 million jobs have been created - but average wages have dropped 23 percent. The top five fastest-growing occupations have been in low-wage work, in personal care and at places like strip malls and fast-food restaurants.
As our nation's job creators, small businesses can be a part of the solution. According to the Federal Reserve Bank of Atlanta, places with a high density of locally-owned businesses have higher incomes and better employment growth, and much less poverty. And, economists at Yale and the University of Bristol write that in times of high unemployment, small businesses both create and retain more jobs than large companies do.
What is the current financial climate for small business in the U.S.? It's getting stronger! Independent businesses experienced healthy sales growth and expanded hiring in 2015, according to the Institute for Local Self-Reliance. In fact, small businesses saw a 3 percent jump in sales during the holiday season, versus just over 1 percent at large national chains. This local-first success means more jobs!
What advice can you offer small business owners and entrepreneurs on finding loans and investors for their businesses? Go to your bank first, they often have the best rates. If they can't fund you, look for an SBA lender, as their rates will be closer. And lastly, if you the traditional financial system can't help you, look for a nonprofit community development financial institution (CDFI) like Pacific Community Ventures. We can work with most small business owners that banks or the SBA can't -- and we don't have the sometimes predatory rates that online lenders use.
What are the most common frustrations or complaints you hear from small business owners about finding financial resources for their businesses? The biggest complaint we hear is that banks or SBA lenders have criteria that's too high. For example, we funded a small business whose owner had terrible credit because of their mortgage during the recession. But, as a business owner, they were top-tier. Because of their strict guidelines, the bank couldn't work with her. But we could. And now her loan is paid back, her credit is great, and she's fully bankable at her business.
What are the most common mistakes you see small business owners making in regards to funding their business? Turning to online lenders without reading the fine print, or really understanding what they're getting into. If a business owner needs $50,000, and they need it now, it's easy to get that money online. But, we've worked with many small business owners in recent years who are drowning in debt because they didn't realize the predatory interest rates that were being charged. We've managed to help some of them re-fund at lower rates, but it's a major challenge.
Why is mentorship so important for small business owners? Where are the best places to find advisors? Mentoring doubles your chances of success. According to the Small Business Administration, only 30 percent of businesses make it to 10 years. But for small business owners with a mentor, 70 percent survive to that 10-year mark, double the rate of other small businesses.
The day-to-day needs of making your business grow, and making that growth sustainable, are beyond the skills of any one individual. You started a great company - but now that you're growing, how do you write a business plan? Develop a brand strategy? Having an outside mentor is crucial.
A site like BusinessAdvising.org is a way to get paired with a mentor, for free! it leverages an online platform and volunteerism to provide small business owners with high-quality mentoring at no cost that removes geography as a barrier. If your company is in the Bronx, and the best advisor for your business lives in Virginia, BusinessAdvising.org can make that match happen.
What types of businesses are you excited about investing in today? Any that come through our door! In all seriousness, though, small business owners create jobs, and we're here to help them. We've noticed in the last 10 years that female small business owners, and people of color, tend to start many more businesses than average, but they have a harder time getting capital. So working with and for them is a big priority for us. In the last year, 60 percent of our borrowers were female, and 30 percent were people of color.
What final piece of advice can you offer small business owners on starting and growing their businesses? Find a mentor. It can only help! We've seen business owners who feel like they spend every day working in their business, not on their business. And getting paired with a mentor is a way for them to have a thought partner to really work through their challenges. especially if it's a challenge that's out of their main area of expertise.