Grace Frick is the head of Atlanta-based ACE (Access to Capital for Entrepreneurs). They process micro-loans (averaging from $15,000 to $1 million). 85% of those loans are in metro-Atlanta; 50% are to African-American-owned businesses and 20% to Hispanic-owned businesses. For the most part they borrow money from banks and loan it to small businesses.
HOW BAD HAS COVID 19 HIT SMALL BUSINESSES?
Bad, she says. Katrina, 9/11 and Tropical Storm Sandy each resulted in 20% to 25% losses. She’s expecting 30%-50% losses from Covid!
WINNERS and LOSERS
Some industries are doing fine. If you’re in the security business or have a natural herb shop, you’re fine. If you’re in restaurants, hospitality or hotels, it’s time to pivot. Minority communities not only have to contend with the economic disaster but they’ve been disproportionately slammed by the virus as well.
WET CEMENT MEANS OPPORTUNITY
Grace says this crisis has changed how her staff works as a team. “Tasks which used to take 3 months to accomplish now take 4 days. People are quick to help each other out. Departments rapidly fill in for each other rather than sitting on their hands.” She likes to say: “The cement’s still wet,” by which she means people aren’t rigid in the way they deal with each other and she wants to keep that fluid attitude going forward.
One of her borrowers (a convenience-store owner in an inner city neighborhood) didn’t have a computer, didn’t have digitized financial records, and didn’t have access to a fax machine. This meant he faced huge delays in processing his emergency loan. That’s when the ACE field agent asked if he might have a hard copy of last year’s tax filing. He did. The agent said: “Just take a picture with your smart phone and text that to me right away.” The agent used that information to fill out the paperwork, and the loan was processed without delay.
This kind of resourceful response reflects the Wet Cement flexible thinking that the crisis has prompted. It’s a way of working that Grace wants her staff to continue even after the crisis is over.
IMPACT GOING FORWARD
“Our staff is going to have to become more efficient. Our staff which typically serves about 300 clients at any given time will have to be serving 600 with the same resources. We didn’t lay off any staff and we’ve used this time to help them get new skills. Going forward we will make a big effort to provide financial education. Our staff has skills which they aren’t using. I learned that my assistant has a degree in mathematics. I told her to get out there and help manage the PPP applications when she’s not answering the phones.
We have to keep better data and get better at using it to track track our work, so we can accomplish our tasks more efficiently.”
FINANCIAL EDUCATION
Many of ACE’s business borrowers know how to serve their clients, but can’t track their money. To get those PPP (Paycheck Protection Program) loans, they needed to provide P&L documents. Many of them don’t track their profit & loss numbers at all, they leave it to their accountants to work that out for their taxes. You can be floating in cash but if you’re not tracking your P&L, you could be going broke and not know it until you’ve run out of gas.
Some business owners are taking loans from these financial tech lenders and paying enormously high interest rates. “I don’t object to them doing that, but at the very least they should understand the impact of making that decision.”
RELATIONSHIPS
Grace says that while past experience is helpful, following old habits can block innovation, and make people rigid in their ways. The key to the future, she says, is in relationships. The better you know your clients, the more trust you can build, the easier is respond to their needs with creative solutions to keep things moving efficiently.
“EVERYONE IS MUCH LESS RIGID ABOUT JOB TITLES THANKS TO COVID”
GRACE FRICKS, ACE, Atlanta