The National Black Chamber of Commerce

From: Subject: The National Black Chamber of Commerce Date: Wed, 23 Dec 2009 12:14:16 -0500 MIME-Version: 1.0 Content-Type: multipart/related; type="text/html"; boundary="----=_NextPart_000_0000_01CA83C9.72308CD0" X-MimeOLE: Produced By Microsoft MimeOLE V6.00.2900.5579 This is a multi-part message in MIME format. ------=_NextPart_000_0000_01CA83C9.72308CD0 Content-Type: text/html; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable Content-Location: http://web.archive.org/web/20020202131131/www.nationalbcc.org/news/testimony/sparker06082000.htm The National Black Chamber of Commerce




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=A9 2000 NBCC, Inc.
All rights = reserved.

NBCC Board Member Suzane Ward = Parker's
Congressional=20 Testimony

COMMITTEE ON SMALL BUSINESS
JUNE 8, = 2000=20 CONGRESSIONAL TESTIMONY
By SUZANE = WARD=20 PARKER
PRESIDENT & CEO WARD GLOBAL ENTERPRISES
65 = WILNER ROAD=20 SOMERS, NEW YORK 10589

Testimony before the Committee on Small = Business,=20 Subcommittee on Government Programs and Oversight, Honorable = Roscoe=20 Bartlett, Chairman.

Chairman Bartlett, Ranking Minority Member Davis, = committee=20 members, thank you for allowing me, Suzane Ward Parker, President = and CEO=20 of Ward Global Enterprises and a member of the Board of Directors = of the=20 National Black Chamber of Commerce, the opportunity to present to = the=20 committee on the issues of women business enterprises and the = availability=20 of capital. Let me first explain that Ward Global Enterprises is a = global=20 company with 2 retail stores selling beauty supply products here = in the=20 United States in Washington DC and Peoria, Illinois with the = ultimate=20 growth strategy of eventually franchising the operation nationwide = thereby=20 offering opportunity to other African American entrepreneurs = through the=20 creation of jobs, purchasing of goods and services and providing = community=20 participation through scholarships and mentoring. Since our entree = into=20 the beauty supply business we have been able to provide = scholarships for=20 minority students in Illinois and have recently started a = scholarship fund=20 for the Howard University Business School. Additionally, our = global reach=20 extends to West Africa to the country of Ghana where we have = established=20 an import business as distributors of hair care products for Soft = Sheen=20 International, a division of Loreal. Finally, the company will be=20 launching a website within the next few weeks, CEOSISTER.COM that = is=20 designed to offer women of color entrepreneurs information, = networking and=20 learning opportunities that will help enhance and promote their=20 businesses.

I welcome the opportunity to come before this = distinguished=20 panel to discuss my experience as an African American woman and=20 entrepreneur and to share with you the perspective of many other = women of=20 color who have had similar experiences.

As you know, women have joined the entrepreneurial = ranks at=20 an astonishing rate (an increase of over 300% this past decade) = and are=20 projected by 2005 to increase ownership by 77% and generate close = to $4=20 trillion in revenue. This is in spite of the fact that we have not = had the=20 same access and availability to capital and contracts as majority = males.=20 Businesses that should be up and running and mature are still at = the=20 starting gate because of this critical issue. I continually hear = from=20 minority women with fantastic ideas for businesses that at the = same time=20 relate tales of woe regarding inability to secure capital. These=20 businesses range from technology, trucking, manufacturing, = consulting=20 services, wholesale trade, mining, finance, engineering and the = list=20 continues. These are very talented individuals, many who have = previously=20 held executive positions in our country=92s finest corporations = and business=20 schools; well trained, experienced and technologically competent = but=20 lacking one thing: capital.

Let me first address the most important issue of = capital.=20 Obviously access to capital is a key ingredient to the success of = every=20 business however it is the rare case when a woman and especially a = minority woman has been able to secure financing prior to opening = a=20 business. In my own experience, I started my first venture which = was a=20 consulting business without financing and subsequently opened my = first=20 retail operation with my own funds prior to securing funding from = a SBA=20 backed commercial loan. Additionally I have yet to meet one = businesswomen,=20 minority or majority who has been able to secure initial financing = for a=20 business venture - therefore tremendous talent is wasted and delay = experienced as a result of having to find non traditional sources = of=20 funding which can be expensive and risky (ie credit cards, = family).

The greater loss here however is the contribution = and impact=20 that we know minority women entrepreneurs can make to a community = and to=20 the labor market through the creation of jobs and improvement to=20 economically challenged areas. In 1999 women business ownership = increased=20 103%. The economic impact of those businesses resulted in an = increase in=20 employment of 320% (27.5 million employees) and a growth in sales = of 436%.=20 These are impressive figures considering the rate of traditional = funding=20 for those businesses is not consistent with the rate of growth. = Clearly=20 the disparity of funding and the impact of those decisions will = have an=20 immediate effect and long-term impact to our economy, especially = in those=20 areas in need of goods and services. Many women are discouraged = from even=20 considering the process due to a number of factors.

Fear of rejection: The reception one gets when = approaching a=20 bank is less than welcoming. The typical response from a bank = officer is=20 to hand you a stack of brochures and send you on your way. There = is no=20 attempt to set up a consultation with a bank official to help = guide you=20 through the process or answer questions. Unless you are persistent = and a=20 bit pushy, you will not be able to get in front of a decision = maker until=20 someone of lower rank first reviews your file. Only then is it = passed on=20 assuming that the underwriters feel there is merit based on their = credit=20 formulas.

Level of paperwork: Many women after approaching a = bank and=20 then being told the loan must be SBA secured are turned off by the = ensuing=20 lengthy process and burdensome paperwork. The number of forms and = the=20 records requested is excessive. The shortened process produces = inches of=20 paper much of which is redundant. The question we all ask is =85Is = all this=20 necessary? Let me also add that there are banks that use the SBA = loan=20 guarantee as a way to discourage women from applying. Too often = the banks,=20 without a full picture, will very quickly require the SBA = guarantee before=20 completely reviewing the applicant=92s file. The level of = consideration and=20 receptivity toward reviewing and writing the loan of a minority = woman=20 generally must be tied to the SBA. The banking industry appears to = want no=20 risk whatsoever as it relates to minority women. The end effect of = those=20 decisions is that it does lengthen the process and provides = greater=20 documentation burden on the business owner.

Divorced women have the additional burden of = having to not=20 only account for themselves but must also explain financial = decisions that=20 a former spouse may have made both positive and negative that now = effect=20 their financial standing. As a global entrepreneur, finding = finance=20 options to start up or enhance a foreign operation is next to = impossible.=20 With the exception of letters of credit my experience of = researching=20 alternatives for manufacturing operations overseas have led to = continued=20 frustration and dead ends. The appetite of U.S. banks to consider=20 financing of a non-U.S. venture is not there. One particularly = frustrating=20 experience occurred after attending a conference on business in = Africa and=20 listening to a bank representative express the bank=92s position = and desire=20 to accommodate those type of investments. Upon contacting the same = individual about a week later (he encouraged me to call) I was = then told=20 the bank would not even consider loans to that part of the world. = He would=20 not even as a courtesy look at my business plan. When I inquired = why he=20 held negative opinions the gentleman gave me numerous erroneous = excuses=20 about West Africa, that indicated his level of knowledge of the = region was=20 outdated and out of touch. Unfortunately, I have found that = attitude to be=20 more the rule rather than the exception however these individuals = are the=20 decision makers that make it difficult to impossible to obtain = financing.=20

The ability to sustain the business even after = receiving=20 initial funding is also an issue. The expectations of the = financial world=20 are somewhat skewed as it relates to securing additional funding = for our=20 businesses. When you provide your business plan it is generally = clear and=20 expected that the ROI will not be realized for 18 months to 2 = years=20 however when you approach a bank for additional funds the typical = response=20 will be to ask why the business is not yet profitable when you = have not=20 even reached those milestones yet. There appears to be an unfair = level of=20 expectation. I think we all know that same level of scrutiny is = not evenly=20 executed across the business world. If this were the general = practice I=20 believe many of our leading corporations would have folded in = their early=20 stages.

The other area that needs critical examination is = in the=20 area of procurement and contracts. Measured in both the number and = dollar=20 value of federal contracts the participation of women business = owners fall=20 woefully short. Again, although women comprise almost 40% of small = businesses of which 12.5% are minority women, we only receive 1.7% = of=20 federal prime contract dollars and 3.5% of subcontract dollars. = (1996=20 data) Additionally, in 1999 the SBIC only awarded 1% of the = venture=20 capital program to women. As we sit here before Congress, I am = encouraged=20 that this panel is asking the right questions regarding problems = and=20 issues however I am continually amazed that the issue of contract=20 disparity continues to exist especially given the approved = governmental=20 structure and funding designed to eradicate discrimination in the=20 assignment of contracts with the government. The problem is even = more=20 acute with women of color. Ladies and gentlemen, there are = qualified women=20 and minorities available with the goods and services so I ask=85 = Why can=92t=20 we receive our fair share? As the United States is experiencing = one of the=20 greatest periods of business expansion does it make sense that a=20 significant percentage of the business world is being left out or = granted=20 less than their fair share of the total opportunity.

In conclusion, what is needed for minority women=20 entrepreneurs to be successful is equal access and fairness to = financial=20 institutions and government programs that have unfortunately had a = history=20 of discrimination. The American dream should not be so far out of = reach as=20 to be inaccessible especially given the framework that is already = there.=20 To address these inequities and begin to see real progress = Congress needs=20 to critically examine why the disparity in lending exists and put = the=20 appropriate measures in place to remedy the situation. This is the = challenge that this body must face and ultimately solve.

Many of us in the business community would also = welcome=20 alternatives to traditional sources that take into consideration = that many=20 of us do not have the luxury or access to friends and family with=20 financial resources to help us get started. Far too many of us = without=20 =93trust funds=94 are forced to use our credit cards and mortgage = everything=20 to the hilt. It is a statistical fact that 60% of women owned = businesses=20 utilize credit cards and finance companies to get started which = indicates=20 that perhaps we are facing barriers in accessing traditional = credit and=20 clearly paying more for that credit.

Recently women have been turning to the venture = capital=20 industry especially for technology ventures however the story here = is=20 somewhat similar although more encouraging. Although African = Americans=20 have not been participating at the same rate, this area appears to = have=20 promise due to the aggressive nature of venture capitalists and = the entr=E9e=20 of a number of minority owned venture capital firms. Clearly if = the well=20 established banks are unwilling to lend to us then we need these = firms as=20 well as minority owned banks that will see our diversity and = experience as=20 a asset and give fair consideration for the unique challenges we = face. The=20 government could take the lead in this area by designating part of = SBIC=20 funds for exclusive use of women owned businesses.

Serious consideration needs to be also be given = toward=20 reducing the paperwork required as well as expediting the process. = The=20 established guidelines indicate a turnaround time that is more of = a wish=20 versus today=92s reality. There should also be an option to = electronically=20 submit an SBA application and have the capability to query the = status=20 online as well. Too much time and resource is spent chasing the = bank=20 contact who will typically blame the delay or lack of information = on the=20 SBA.

Finally, a proactive approach to accessing = government=20 contract information and bidding needs to be addressed. It is = truly=20 shameful as we discuss disparate treatment that the government = procurement=20 and contracts process has such a deficient report card. The level = of=20 contracts awarded to minority women and women in general must = improve. As=20 all women and especially minority women continue to pursue their = own=20 businesses and help strengthen our economy, create jobs and = opportunity;=20 it is incumbent upon our national leaders to help erase any and = all=20 barriers to not only their success but the country=92s success. =

Again, thank you for the opportunity to address = this=20 distinguished panel.

[Related Links]

NBCC=20 President Harry Alford Testifies before House Banking &=20 Financial Services Committee June 7, 2000

NBCC's=20 Harry Alford Testifies before House Small Business = Committee=20 October 21, 1999

Press=20 Releases
Editorials
Hotsheets
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=

The National Black Chamber of Commerce
1350 Connecticut = Ave. NW=20 Suite 825
Washington, DC 20036

202.466.6888 | Fax 202.466.4918
info@nationalbcc.org=20

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