Before Capital Connect began, new entrepreneurs would approach one of Buffalo’s four main Community Development Financial Institutions directly. This worked fine if the borrower and the lender were the right fit. However, CDFIs would often send applicants to a different CDFI, based on their needs and plans, which made the process confusing and time consuming. Now, Capital Connect has eliminated that extra step and directs entrepreneurs to the best CDFI for them, based on their application. And CDFIs, like the Westminster Economic Development Initiative, have found that this new program has made it easier for their clients to navigate the local lending landscape.
“It's very simple to use,” said Grove Potter, WEDI development director. “You come to it, put in a few easy facts, and you are directed toward the correct lender. That removes so much effort and stress for the entrepreneur in the application process. Imagine having to go here--oh, we're not the right one. Go here--oh, we're not the right one. Go there. This just paves the road. It's much simpler.”
One of WEDI’s newest success stories is Felicia Dussett, who started Mac Lady, a gourmet macaroni and cheese business, to supplement her income. As a minority and woman-owned business operator with little to no experience managing a startup, she originally applied through Launch NY, but Capital Connect decided WEDI would be the best lender.
"After I applied, it took about three weeks to receive the loan. It's enough to help me get started with permits and licenses," Dussett said. "This is my dream. I wish I had done this years ago."
“Mac Lady is renting a commercial kitchen space out of a church to make her product at a Health Department-certified kitchen and she's selling it,” said Yanush Sanmugaraja, WEDI economic development director. “She actually catered our loan committee a month ago. But her main line of business is just catering gourmet macaroni and cheese, and hopefully we can help her expand into food packaging soon.”
WEDI is working with two other new businesses that Capital Connect referred to the agency. One is a transportation company and the other is a retail/e-commerce firm. Both work with WEDI’s underwriting criteria and the organization’s loan committee hopes to start financing them in the near future.
Sanmugaraja pointed out that Capital Connect helped Buffalo’s four main CDFIs generate nearly 100 new businesses by combining their marketing efforts, through a $30,000 investment. He believes that impact could be even higher if each of the CDFIs abandoned their individual marketing efforts and only collaborated through the Capital Connect portal.
WEDI would like to expand Capital Connect’s business mentoring services even further by including business advisory agencies like the SBDC (Small Business Development Center) the Western New York Law Center, the Volunteer Lawyer’s Project, and others.
Sanmugaraja feels this is a necessary next step in helping new entrepreneurs in the area succeed. “There's just so much to know and we can't really expect them (business owners) to know all of it. So, if this works for the lending programs in Buffalo, we'd like to expand it further to include more, in terms of education. And so far, it does appear to be working and completing the function that we intended it to.”
One way that Capital Connect could work better is with more automation. Currently, applications to Capital Connect have to be entered manually into the system, and Sanmugaraja believes that a more automated portal could process applications faster and make it even easier for new applicants to get connected to the financing and business services they need.
Potter feels that if other referral websites, including the City of Buffalo’s, sent business owners directly to Capital Connect, it would reach more potential clients. Currently, WEDI and Excelsior Growth Fund are listed on the city’s website, but CDFIs Launch NY and PathStone Enterprise Center are not.
WEDI is hosting a workshop on managing time for small businesses on Aug. 21 at WEDI’s office in Buffalo on 436 Grant St. On Sept. 23 WEDI will host a workshop at The Foundry, located at 298 Northampton St. in Buffalo on supply chains, production, prototyping, and procurement. Both workshops start at 5:30 p.m..
Potter said WEDI plans to keep financing minority, woman- and immigrant-owned businesses.
“These entrepreneurs we're reaching have never accessed this world before,” he said. “So anything we can do to make it easier, simpler, better for them is better for us, too.”