A proposed bank in Iowa wants to support small businesses

This is part three of a five-part story published in partnership with the Center for Public Integrity and Word In Black.

WATERLOO, Iowa — The words were direct: “No American metropolitan area has greater social and economic disparities along racial lines.

This is how the financial news site 24/7 Wall St. described this region in a 2018 article ranking it as the worst place in the country for black Americans.

It struck like thunder in the black community. Residents already knew there were problems – a report the year before called the region “still severely segregated”, and there were huge income and property gaps between whites and blacks. But now they had the empirical ranking which showed that Waterloo’s problems did not simply reflect those of the country.

Joy Briscoe, a talent acquisition specialist for the Waterloo School System and a black community leader, thought back to her childhood in the city in the 1980s and couldn’t say things had gotten any better.

In fact, a key economic measure was getting worse. In 1950, despite barriers erected by powerful people, the city’s black homeownership rate was an impressive 68%, double the national figure for black Americans and about the same as for black Americans. white residents of Waterloo.

Good industrial jobs and union leaders committed to racial equality have made a difference, said Colin Gordon, a history professor at the University of Iowa whose students followed the covenants at Waterloo.

Then many of those jobs disappeared. And the black community, with less intergenerational wealth to draw on and homes devalued by redlining and other discriminatory practices, has been hardest hit.

Economic Losses Exceed Civil Rights Gains

Black homeownership numbers tell the story: 46% in 1990, 40% in 2010 and at the end of the last decade, 32% – the reverse of the economic situation at the start of the civil rights era.

“For working-class African Americans in the urban North, the economic losses (lower wages, unemployment, deindustrialization) eclipse most of the legal gains of the civil rights movement,” Gordon wrote in an email.

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This experience was tied to Briscoe’s own family history. And now, the same month that ReShonda Young was considering a bank, Briscoe and other local leaders, excited about the 24/7 ranking, have come together to discuss another way to tackle the wealth gap: start a business accelerator that would support black entrepreneurs with mentorship. , training and other support.

They needed someone to lead it, someone with an entrepreneurial background, a habit of helping other business owners, and the ability to build something new at high speed.

The answer seemed obvious to them. But would Young say yes?

Support for small businesses combines two missions

She already had a lot on her plate. But the mission fits well with his. Young agreed.

“I was so happy,” said Briscoe, executive director and co-founder of the group, the 24/7 Black Leadership Advancement Consortium (24/7 BLAC). “It was really fate: the planets aligned. God was smiling at us. … We couldn’t have found a better person.

In September 2020, the accelerator was working with a dozen business leaders. Other cities in Iowa quickly called, hoping to replicate it. 24/7 BLAC raised hundreds of thousands of dollars in grants to sustain the accelerator and other efforts as Young helped recruit more participants, lead discussions, and work with entrepreneurs on their challenges.

Often their biggest challenge was getting a loan.

Credit ratings: a mirror and an anchor

Accelerator participant Rosie Daniel, owner of LuLit’s Hair Essence, needed to replace the failing car she relied on to make deliveries of her hair restoration products.

She went to a local credit union where she applied for a business car loan in 2020. She said the lender, after assuring her that he would check her credit score without a “thorough investigation” that would solve it, told him it was ‘t high enough.

Then, in the parking lot afterwards, she saw an alert on her phone that made her even more upset: it had been a difficult investigation. The credit rating she had worked hard to improve would go down for nothing.

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Daniel, who is eager to transfer his accounts to Bank of Jabez, called Young on the spot. “Guess what just happened to me,” she said.

Young listened, feeling more certain with each story like this that the bank needed to change. Too often, a credit score simply reflects the wealth gap — and helps maintain it. After delving into the finances of accelerator participants and understanding their risks and opportunities in a way no numbers could convey, Young thought local banks could broaden their focus for customers, “by looking at them and their business holistically”.

She and other BLAC 24/7 representatives suggested this type of broader thinking — which some financial institutions are already using — in conversations with local bank CEOs, all of them white. Some agreed it was a good idea. Others weren’t receptive, Young said — their loan approval process worked for them and they didn’t seem interested in changing.

But she could see that Stacey Bentley, president and CEO of Community Bank & Trust, took the request to heart.

The two women knew each other from serving on local boards together, and Young hid a thought: Maybe Bentley, which helped open Community in 1997, would be willing to offer Bank of Jabez advice. .

You can listen to a podcast on Young’s quest in the new season of “The Heist.”

Jamie Smith Hopkins is a senior reporter and editor at the Center for Public Integrity, a nonprofit newsroom that investigates inequality. She can be contacted at [email protected] Follow her on Twitter at @jsmithhopkins.

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