Businesses in low to moderate income parts of the Dayton region can get training and consulting to develop their companies through a new program funded by Fifth Third Bank.
The funds are for a consultant who will help businesses navigate applying for bank loans and for business development training.
Fifth Third, based in Cincinnati, made a $30 billion commitment last year for community lending and investment in its 10-state coverage area.
Under the Community Reinvestment Act, banks have obligations to meet the credit needs of the communities they are in and often negotiate community reinvestment agreements under the act that include lending goals focused on low-to-moderate income communities.
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But the commitment to award billions in loans doesn’t always translate to loans given if the specific barriers to getting a loan aren’t addressed.
“When you look at the history of lending in low-to-moderate income areas, I don’t know if there has been a bank that’s been able to meet those particular goals,” said Donerik Black, director for the Ohio Small Business Development Center at Wright State University.
“In a lot of situations, it’s not that the businesses aren’t bankable. It’s just that the criteria the banks set forth to be to be able to justify lending money isn’t met,” he said.
So what the Dayton program by Fifth Third is doing differently is it is funding a dedicated professional to get into the nuts and bolts of local small business so when the business owners walk into a bank and apply for a loan they are able to be successful, which is something that the Small Business Development Center and Minority Business Assistance Center wouldn’t otherwise have the resources to do.
“The difference is Fifth Third is making an actual investment in the business owner by empowering us to work directly with them to their specific challenges,” said RoShawn Winburn, director at the Minority Business Assistance Center in Dayton.
The first cohort group will meet for the training program starting in December and work for 90 days and the next cohort will also meet for 90 days, after which the two organizations will follow back up with Fifth Third to determine what’s next.
The program is targeted at micro enterprises with less than $1 million in annual revenue and less than five employees. It’s not intended for startups, but for businesses looking to grow that might need some technical assistance.
They anticipate it will appeal to self-employed business owners that would not otherwise have the capacity to get the training.
The program isn’t limited to any one industry, but should also appeal to construction companies, which are in a slower season and should be a more convenient time to come.
Black said he often sees new businesses fail from a lack of planning, and his office wants to help business owners invest upfront in learning about their industry and how to be an efficient business.
And not all businesses who finish the classes will end up needing a loan, but the course will help the business owners have a more solid footing for their company.
“They may not need capital at the end, but will walk away more prepared to grow,” Winburn said.