- Wells Fargo announces plan to help
address study findings, help more diverse small businesses get
credit-ready, access credit
- Four-point plan includes expanded
credit coaching program, $75 million in investments and grants for
small and micro-business lending in diverse communities, enhanced
Chamber Training Institute for diverse leaders
To gain more insight into the experiences of diverse business
owners in the areas of lending and operating their businesses,
Wells Fargo commissioned Gallup to conduct a national study of
small business owners. Today, as Gallup releases the findings (on
Gallup.com), Wells Fargo is announcing a four-point plan to address
needs identified in the study. The plan will help more diverse
small businesses become credit-ready and gain access to credit. The
Gallup survey included findings of business owners in six segments
– African American, Asian American, Hispanic, LGBT (Lesbian, Gay,
Bisexual and Transgender), military veteran, and women.
“Serving diverse communities has long been a focus area and
priority for Wells Fargo, yet we know there’s more work to be done,
and it starts with gaining a deeper understanding of the
experiences of diverse small business owners working with financial
institutions,” said Lisa Stevens, head of Small Business for Wells
Fargo. “For this reason, we commissioned the Gallup study, which
gave us new insight into the perceptions and experiences of diverse
business owners working with banks, and how we can improve as a
company and as an industry.”
Overall, the national study revealed there are more similarities
than differences between small business owners in all diverse
segments and those in the general population. It also shows
specific areas in which the financial services industry can provide
more support for diverse business owners.
Credit Coaching Program
In the Gallup survey, diverse-owned small businesses were more
likely to respond that they have been declined for business credit
– about one in five African American, Asian and Hispanic business
owners said they faced a credit decline in the past (14 percent of
general market respondents said they faced a decline). After being
declined, a higher percentage of African American business owners
(64 percent) said they did not apply for credit again than their
peers in the general small business population (47 percent).
African American (14 percent) and LGBT (15 percent) business owners
also reported greater personal credit challenges than the general
market (5 percent).
To help business owners learn how to obtain credit, as well as
better understand the reasons for a decline and learn how to
prepare to reapply, Wells Fargo has launched an enhanced Credit
Coaching program. It offers expanded support to business owners who
have been declined business credit. The phone-based program has
been rolled out to small business owners who apply for Wells Fargo
Business Direct credit products (primarily credit products under
$100,000 sold through its retail banking stores). Business owners
who use the program will be connected with a credit specialist who
will review the business’ credit profile, explain why the business
was declined credit, and share resources that can help the business
strengthen its credit profile and improve the likelihood of being
approved for business credit in the future.
In addition, while the majority of business owners surveyed
across all segments said they did not feel a perception of
discrimination from a financial institution impacted their chances
of obtaining business credit, 22 percent of African American and 11
percent of LGBT business owners reported that perceived
discrimination impacted their chances of obtaining credit for their
business, compared to 5 percent of the general small business owner
population. The Credit Coaching initiative will be one way Wells
Fargo will further increase transparency of credit decisions and
facilitate conversations that build trust with all customers.
“We take pride in the fact that diversity and inclusion has long
been one of our core values in every aspect of our business, and at
every level of our organization,” said Stevens. “We want to make
sure all customers feel welcome, respected, understood, valued and
appreciated. The actions we’re introducing today are the next steps
for Wells Fargo to better serve and connect with diverse-segment
business owners.”
Community Development Financial Institutions Investments,
Grants
Another key finding in the Gallup study is that African
American, Asian and Hispanic small business owners are more likely
to be in the start-up and growing stages of their business,
compared to the small business population in general, and as a
result may not qualify for many conventional bank loan products. In
addition, 49 percent of African American-, 47 percent of women- and
45 percent of LGBT-owned businesses in the survey reported annual
business revenue of less than $50,000, compared to 36 percent of
small business owners in general.
To help newer, smaller and start-up businesses access the
appropriate business financing and support they need, Wells Fargo
will extend $50 million in investments and $25 million in grants to
organizations called Community Development Financial Institutions
(CDFIs) that serve small businesses and entrepreneurs. The
investments and grants will be directed to CDFIs that help small
businesses get started and established by providing flexible
capital and technical assistance. Wells Fargo will work with
existing and new CDFI customers in diverse communities across the
country to deploy this capital and measure its impact.
“We know that in order to address the range of financial needs
within all of our communities, we need to support and work with the
ecosystem of organizations that serve small businesses,” said Jon
Campbell, executive vice president, government and community
relations for Wells Fargo. “Through this increased investment and
connections with community lending organizations, we are making
meaningful strides toward increasing access to capital for small
businesses, as well as helping more business owners get the
coaching and educational resources they need to succeed financially
long-term.”
Nationwide Referral Network
In the Gallup study, more African American, Asian and Hispanic
business owners reported they were unable to obtain all the credit
they needed in the past year than the general business owner
population, yet the majority of small business owners in all
diverse segments said they did not need credit in the last year. At
the same time, nearly one in four African American, Hispanic and
Asian business owners plans to apply for credit in the next 12
months, higher than the general small business owner population
planning to pursue credit (15 percent). Businesses in the startup
and growing phases in general expressed more intentions to apply
for new credit.
To ensure business owners are aware of and accessing the full
range of financing options available to them, Wells Fargo recently
established referral relationships with more than 20 nonprofits and
other lenders in cities across the country that are participating
in the U.S. Small Business Administration’s (SBA) Community
Advantage program. Participants in the SBA’s program specialize in
providing hands-on guidance to small businesses and offering credit
to qualifying businesses in underserved markets. Wells Fargo, the
nation’s No. 1 SBA lender 7(a) in dollar volume for six consecutive
years (U.S. SBA data, federal fiscal years 2009-2014), established
these relationships with the intent of providing small business
owners with an additional financing solution that may better meet
their lending needs.
Chamber Training Institute
On the topic of business education, the Gallup study showed that
African American, Asian and Hispanic business owners were more
likely than business owners in the general population to be
extremely or very interested in learning how to build a strong
business credit application, choose a credit product, and develop a
business plan. To meet this demand, Wells Fargo is supporting a
Chamber Training Institute that trains leaders of diverse-segment
chambers of commerce on key business and leadership topics for
their members, such as how to access business credit and craft
strong business plans. This cross-chamber initiative builds on
Wells Fargo’s strong working relationships with chambers nationwide
that specifically serve and represent African American, Hispanic,
Asian American and LGBT business owner interests.
“There’s no single answer to the challenges reflected in the
study, just as the challenges facing all diverse-owned businesses
are broader than any one financial institution can address,”
Stevens said. “As America’s leading small business lender, we have
a responsibility to do more. We believe the steps we’re taking will
make a difference, help us foster more lifelong relationships, and
move us closer to our goal of helping every business we serve
succeed financially. We want to contribute to a national
conversation, involving the public and private sector, industry
stakeholders and small business owners, about how to better support
small businesses in every community.”
Additional Gallup study findings
Other key findings in Gallup’s industry study included:
- Only about half of small business
owners say they have ever borrowed money for their business,
including the general population of small business owners (50
percent), Asian (53 percent) and Hispanic (51 percent) segments,
while the percentage of African American business owners who have
used credit (42 percent) is somewhat lower.
- African American (21 percent) and
Hispanic (18 percent) business owners were more likely than their
counterparts in the general population (10 percent) to be in the
startup phase.
- Nearly half of Asian-owned business
owners (49 percent) said they were in the growing phase of their
business, a higher percentage than the general population of small
business owners (37 percent). Also, 38 percent of Asian-owned
businesses reported annual revenue of $250,000 or more, compared to
22 percent of businesses overall.
- A higher proportion of veteran-owned
businesses (24 percent) reported being in the winding down phase –
preparing to retire, sell or transition their businesses – than
small business owners in general (15 percent).
- Just 9 percent of women business owners
reported plans to apply for new credit in the next 12 months,
compared with 20 percent of men surveyed.
About Gallup and the “Small Business Diverse Segments Lending
Study”
As part of its Wells Fargo Works for Small BusinessSM initiative, Wells Fargo – in collaboration with
diverse chambers of commerce – commissioned Gallup to conduct a
survey of diverse-segment small business owners. The research was
designed to obtain insight into the experiences of Asian, African
American and Hispanic small business owners on the topic of credit
and gain a deeper understanding of their perceptions of working
with financial institutions, and their overall experiences as small
business owners. Additional surveying was conducted with women,
military veteran, and lesbian, gay, bisexual and transgender
business owners. The focus of the study is on the industry overall,
and not on a single bank or financial institution.
About Wells Fargo
Wells Fargo & Company (NYSE: WFC) is a nationwide,
diversified, community-based financial services company with $1.7
trillion in assets. Founded in 1852 and headquartered in San
Francisco, Wells Fargo provides banking, insurance, investments,
mortgage, and consumer and commercial finance through more than
8,700 locations, 12,500 ATMs, and the internet (wellsfargo.com) and
mobile banking, and has offices in 36 countries to support
customers who conduct business in the global economy. With
approximately 266,000 team members, Wells Fargo serves one in three
households in the United States. Wells Fargo & Company was
ranked No. 29 on Fortune’s 2014 rankings of America’s largest
corporations. Wells Fargo’s vision is to satisfy all our customers’
financial needs and help them succeed financially. Wells Fargo
perspectives are also available at Wells Fargo Blogs and Wells
Fargo Stories.
Wells Fargo serves approximately 3 million small business owners
across the United States and loans more money to America’s small
businesses than any other bank (2002-2013 CRA government data). In
2014, Wells Fargo provided $18 billion in new loans to small
businesses throughout the U.S. To help more small businesses
achieve financial success, in 2014 Wells Fargo introduced Wells
Fargo Works for Small BusinessSM – a
broad initiative to deliver resources, guidance and services for
business owners. For more information about Wells Fargo Works for
Small Business, visit: WellsFargoWorks.com and follow us on Twitter
@WellsFargoWorks.
The Gallup diverse lending study and related articles and videos
are also available on the site.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150520006741/en/
MediaWells Fargo & CompanyJim Seitz,
612-316-2447jim.seitz@wellsfargo.comTwitter: @JimSeitzWForJennifer
Langan, 213-253-3452Jennifer.l.langan@wellsfargo.comTwitter:
@JennLanganWF
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