Supporting Underserved Entrepreneurs

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As it achieves successes in Jersey City, Rising Tide hopes replicate its model in other disadvantaged cities throughout the U.S. and around the world, she says.

Another organization focusing on underserved, inner-city businesses is Next Street Financial, a merchant bank founded near Boston in 2005. While it operates on a for-profit basis, the bank has a "double bottom line," says Tim Ferguson, who, like Next Street co-founder Ron Walker, is a long-time banker.

"We're here to make money for ourselves, our shareholders, and our clients, but everything we do also has to have an economic development component to it. We want to know that we are having an impact on job creation in the inner-city marketplace," Ferguson says.

In contrast to Rising Tide, Next Street targets established companies that have revenues between $1 million and $100 million, with most clients operating in the $4-million-to-$60-million range, Ferguson says. The bank, based on a European model, operates holistically, providing access to capital as well as advice on strategy, management, and marketing.

"There's an enormous gap between what traditional financial service providers offer and what smaller businesses actually need. And it's been going on for a decade or longer," Ferguson says. "Banks have consolidated and adopted a 'check the box' approach to credit. Denial rates for African-American and Hispanic business owners are five to six times what they are for a white-owned business."

No ownership—just brutal honesty

Walker and Ferguson, who met on a nonprofit board and dreamed up Next Street over what they call "a magical cup of coffee," aim to provide Fortune 500-level consulting and mentoring to small business owners who could not afford that quality on their own.

Their typical client is an established company—most have been around 15 or 16 years—with an experienced CEO who is willing to embrace partnership with Next Street. The bank does not take an ownership stake in its clients, but "we will be brutally honest about their status and our opinions; they have to embrace us and not ignore our advice," Ferguson says.

Companies that participate pay monthly retainers of $15,000 to $25,000 or work with Next Street on a project basis, in which case fees can range from $5,000 to $100,000. In the past three years, about 50 companies have become Next Street clients, Walker says, and two have gotten loans of $1.5 million. Next Street has helped an additional six companies raise capital from other sources.

Next Street is looking for clients in New York and Boston. Like Rising Tide, its founders hope to expand to other cities, including Chicago, Los Angeles, San Francisco, and Miami. Companies that are minority- or female-owned and fit their revenue range, but operate outside of the Northeast, can apply for Next Street's help at its Web site.

Because there is no definitive clearinghouse listing every organization that aids entrepreneurs, there are some gulfs between small companies that need help and the groups that provide it. Here are some possibilities for entrepreneurs looking to find help with education or funding:

The official Web site of Global Entrepreneurship Week lists events sponsored by the more than 1,100 organizations that participated in GEW activities from Nov. 16-20. The events—searchable by city, state, and country—have concluded, but the groups sponsoring them may serve as local starting places for entrepreneurial resources.

The Association for Enterprise Opportunity represents microenterprise development organizations. It also has a searchable resource library.

The Boston-based Initiative for a Competitive Inner City focuses on small business development in underserved areas.(Read an interview with the founder and learn more about the group in this special report.)

Los Angeles-based Operation Hope undertakes entrepreneurial and anti-poverty initiatives around the world.

The Accion Network is a microlender and microenterprise development organization that operates around the world and in the U.S.

Boston-based InnerCity Entrepreneurs sponsors a nine-month "StreetWise MBA" program and partners with the U.S. Small Business Administration in its educational initiatives.

Goldman's 10,000 Small Businesses is planned as a five-year program modeled on the firm's 10,000 Women initiative, which helps women entrepreneurs in 18 countries around the globe.

Karen E. Klein is a Los Angeles-based writer who covers entrepreneurship and small-business issues.

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