Nevada minorities seeking more loans for small businesses

Friday, March 15, 2002 | 10:42 a.m.

Three months ago Jolene Machado was ready to bail out on the Hawaiian Style Cafe, a restaurant she started with her best friend from Hawaii only a year ago.

"After Sept. 11 there were a few months where no one was coming in, and we were about ready to give up," she said.

Aaron Mack, on the other hand, decided to start his own hair and nail salon in the coming months as a way of protecting against the layoffs he's been reading about in the newspaper.

"I figure it's time to start thinking of providing some security for my 8-year-old son," said Mack, a freelance investment consultant.

The two have one thing in common -- they're among the growing number of people statewide seeking out the Nevada MicroEnterprise Initiative, a nonprofit agency that offers training and loans to very small businesses.

They are also both minorities -- Machado is Hawaiian and Mack is black -- making them part of another trend, a rise in minority interest, said Anna Siefert, the agency's operations manager.

Both attendedan orientation class recently at the nonprofit's Las Vegas offices, where eight of 13 people were minorities.

"Whether it's startup businesses that are struggling, workers who have been laid off or workers worried about layoffs, we're seeing a lot more people coming to us since Sept. 11, and a lot more minorities than ever before," Siefert said.

"People are saying, 'I have to take charge of my own destiny.' They want to be in control."

Historically, about 70 percent of the agency's loans have gone to whites, 15 percent to blacks and 8 percent to Hispanics, with the rest divided among other minority groups.

In recent months, however, loans to whites make up only 62 percent of the total, loans to blacks remain at 15 percent, and loans to Hispanics are up to 18 percent.

The 10-year-old agency fills a need not met by some banks, some of which won't lend to startup businesses that need loans between $5,000 and $10,000 or to many existing businesses that need up to $35,000.

"The startup businesses are too small and have little or no collateral. And many of the existing ones have no cash flow or bad credit," Siefert said.

Apart from offering eight-week courses to help entrepreneurs open their own businesses and "tune-up" courses to businesses more than a year old, the nonprofit is a lender authorized by the Small Business Administration.

Its funds come from the SBA, foundations and banks.

With offices in Las Vegas, Carson City and Reno, the agency has given loans to 122 businesses in a decade, nearly evenly split between startup and existing businesses.

Still the recent increase in minority applications surprises Siefert.

"I'm not really sure why this is happening," Siefert said. "Maybe minorities are more affected by the layoffs. Or it's a reflection of the city's growing minority population. Or perhaps the word is getting out in the minority community."

Ruben Flores is a good example of how the word has gotten around.

Flores, owner of Ruben's Auto Body and Paint in North Las Vegas, got to the nonprofit right before Sept. 11, after two years of trying to get a loan elsewhere.

"I must have been all over this state, but everybody kept telling me I didn't qualify, no matter how much paperwork I submitted," Flores said.

The 65-year-old mechanic found out about the Nevada MicroEnterprise Initiative by chance, and he was approved within a matter of weeks.

Then Sept. 11 hit.

"No one came into the shop for weeks. I fell two months behind in rent and had to use part of the loan for that. But the agency was patient with me and even checked in to see how I was doing."

Flores, who said half of his clients are Hispanic, has spread the word about the agency to Hispanic friends interested in starting or expanding an auto repair shop, a restaurant and a grocery.

"If it wasn't for them, I would have closed my business a year ago.

"The thing is, they were the only ones who sat down with me and listened to what I wanted to do. I wasn't all nervous, like being in a bank. It was more like being in your own living room."