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People of color are often blocked from getting loans. A new Fort Worth program tries to change that

Mayor Mattie Parker, right, stands at a podium speaking into a microphone. The audience in the conference room listens attentively.
Miranda Suarez
/
KERA News
Mayor Mattie Parker, right, kicked off the new CDFI Friendly Fort Worth program on January 26, 2022.

The City of Fort Worth wants to open up a bigger pool of money for the city’s entrepreneurs of color, who often lack access to loans that could help their businesses thrive.

A new program, called CDFI Friendly Fort Worth, plans to match business owners, potential homeowners, nonprofits and affordable housing developers with flexible loans.

The program will connect local businesses with banks, credit unions or loan funds that specifically serve low-income communities or communities of color.

Those financial institutions fall into a category called “community development financial institutions” – where the “CDFI” in the program’s name comes from.

The city has committed $3 million to CDFI Friendly Fort Worth, which will hopefully jumpstart entrepreneurs of color, said Fort Worth Mayor Mattie Parker at a press conference on Wednesday morning.

“Fort Worth has really, for a long time, struggled, frankly, to focus in our communities that need us most,” Parker said. “Especially our Black and Hispanic communities that have amazing businesses that really teeter every month to month to just make it.”

Racial discrimination cuts off minority-owned businesses’ access to funding nationwide, according to a 2010 study by the U.S. Department of Commerce. Minority-owned businesses are more likely to be denied a loan, and the loans that are extended tend to be smaller, with higher interest rates.

Community development financial institutions work to fill the lending gaps in traditional banking, said Marla Bilonick, president and CEO of the National Association for Latino Community Asset Builders.

Traditional banks may have strict criteria when it comes to offering loans, while community development financial institutions can be more forgiving, Bilonick said.

She compared traditional banks’ approach to evaluating someone’s homekeeping ability based on their teenage son’s disastrous bedroom. Meanwhile, a community development financial institution would look at the whole house.

“They wouldn't just judge you from that one aspect or that one blemish on your household,” Bilonick said.

Overall, it’s harder for minority-owned businesses to grow and succeed, said Robert Sturns, the City of Fort Worth’s economic development director. The COVID-19 pandemic has made survival even more difficult.

“Service industries, including accommodation, restaurant, retail, which have the highest share of minority ownership, have been the most highly disrupted,” he said.

About 60% of the city’s census tracts are eligible for help from this program, meaning there is a significant level of economic distress in those areas, according to data from CDFI Friendly America.

The city expects to see up to $250 million in new loans from community-focused institutions over the next five years.

Got a tip? Email Miranda Suarez at msuarez@kera.org. You can follow Miranda on Twitter @MirandaRSuarez.

KERA News is made possible through the generosity of our members. If you find this reporting valuable, consider making a tax-deductible gift today. Thank you.

Miranda Suarez is KERA’s Tarrant County accountability reporter. Before coming to North Texas, she was the Lee Ester News Fellow at Wisconsin Public Radio, where she covered statewide news from the capital city of Madison. Miranda is originally from Massachusetts and started her public radio career at WBUR in Boston.