Banking on KC – Shakia Webb of the Kauffman Foundation
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Kelly Scanlon:
Welcome to Banking on KC. I'm your host Kelly Scanlon. With us on this episode is Shakia Webb, the small business capital access program officer for entrepreneurship at the Ewing Marion Kauffman foundation. Welcome Shakia.
Shakia Webb:
Thank you, Kelly.
Kelly Scanlon:
Shakia, in your role at the Kauffman foundation, you manage grants that are designed to address some of the systemic inequities that impede entrepreneurs access to capital. What are some of the challenges that you can speak to that entrepreneurs face in accessing capital?
Shakia Webb:
Specifically black and brown entrepreneurs and women entrepreneurs. And you'll hear the phrase BIPOC owned businesses. Essentially, just due to just whether it be systemic challenges that are at place preventing them to access and oftentimes what ends up happening is they're either using income from their salary, income from their savings. Sometimes they might be able to get access from family or friends, but when you talk about specifically having access to financing, oftentimes 83% of firms struggle with getting that first starter finance that they need to start their business.
Kelly Scanlon:
When you talk about those systemic inequities, are there some in particular that you can name?
Shakia Webb:
Oftentimes it could just be just that generational wealth, right? So when you think about access and financing, and particularly if you're doing a business loan, you're usually required to put down a percentage. And so if you don't inherently have wealth or have access to that equity, then you are already, you're kind of for starters, setting out to face some challenges as it relates to starting your business. And so oftentimes they are slow to start. Meaning they may start at home because again, they have a nine to five and they're using their salary income to start some of those businesses.
Kelly Scanlon:
Or they may not have a home that they can pledge against a loan, for example.
Shakia Webb:
Exactly. So then that will fall under the example of having collateral. That's exactly another challenge that small business entrepreneurs face is just not having the collateral that it would take to access financing as well.
Kelly Scanlon:
Your background has given you such a broad perspective of the capital landscape, especially for entrepreneurs. It's a very, very well rounded background. For example, you spent many years yourself in banking, and while you were there, you originated commercial real estate loans for small businesses. And some of the other things you did was to help entrepreneurs find financial solutions. And in addition to that, you've spent quite a bit of time serving on the boards of organizations or being a member of organizations that are community focused, business focused, entrepreneur focused. And so with that in mind, how do you personally put all of that first hand experience that you bring to this position? How do you bring that to work for entrepreneurs?
Shakia Webb:
Yeah, Kelly, I mean, I think you said it just kind of in the beginning of the question that you asked me is really about closing those gaps. So whether it be closing the gaps to access to resources, closing the gaps to professional services that entrepreneurs may need to rather be, start, grow, or sustain their business, but it also to getting access to equity because again, as we talk about in that previous question, oftentimes that is something that entrepreneurs face firsthand is that they just don't have the equity to start the business. And then also again, once maybe they get to a point of where they did get the education that they're needing, they did get connected with some professional resources, it's oftentimes too that they just still don't have that cash or don't have that collateral to start the business.
Shakia Webb:
So for me, it's just about identifying what those challenges are. It also may too be that they don't even have access to a lender. Because really one of the things about having a business relationship and getting access to these things is really having a relationship with your banker. That is really important meeting the entrepreneur where they're at. So I think a lender needs to be able to identify that. What are the needs for the entrepreneur, meeting them where they are and then getting them connected. So I would say in my role as a lender, I was very observant in that. Kind of identify what it is that the entrepreneur needed and then connecting them with that resource.
Kelly Scanlon:
Exactly. And part of that too, would be helping the entrepreneur know where they need to shore up before they even have a conversation with a lender. What do I need to get in place? Maybe there's some systems I need to get in place. Maybe there's some gaps on my balance sheet. I need to take care of things like that. They address them now that it will increase their chances of success when it comes time to talk with a lender.
Shakia Webb:
Absolutely. You hit it right on. It is just educating the borrowers. But also, because there's a lot of programs out here in the Kansas City ecosystem that helps businesses grow, establish, develop, maintain, et cetera. But also too, it's really important is that it's coming from a lens of a lender, meaning, what is it that the banks are looking for? So they're able to help guide those entrepreneurs on what those next steps should be.
Kelly Scanlon:
Exactly. It's not a simple exercise to address these barriers. It's very complex and because it's complex, it requires a multi tiered approach. What are some of the elements involved in that approach?
Shakia Webb:
Yeah, I mean, I would say again, what I just kind of mentioned established with building relationships, right? So identifying your chambers, identifying any type of entrepreneurship support organizations, any technical assistance providers. Really just get to know the small business community and ecosystem. I say that's important because no matter where the entrepreneur enters into this ecosystem, whether it be with the lender, whether it be with entrepreneurship support organization, wherever it is, someone should be able to identify where they are, what their needs are and then connecting them with those next steps.
Kelly Scanlon:
What's it going to take to overcome these systemic barriers over and above what an entrepreneur does or an advocate such as yourself does?
Shakia Webb:
Well, when you ask me, what is it going to take? I really think it's going to take an approach that's just not one facing. So in other words, you can't just provide financial education, right. You can't just provide equity. I think sometimes both go hand in hand. I think if we educate entrepreneurs on one, what does it take to develop, maintain, manage a successful business. But on the flip side of that, again, if you're seeking financing, what does that look like? You know, what is the bank looking for or why are they looking for those specific things and that criteria.
Shakia Webb:
And I think combining the two, we are definitely setting the entrepreneurs up for success, opposed to, I think, setting them up to fail or just putting them at a disadvantage. And again, I also think once they have been connected with some of those professional services that they shouldn't go away. So in other words, if you have a membership with the chamber or if you're linked to one of these entrepreneurship support organizations out there, not just about going through that program, you know that one time, it's really about maintaining that relationship because as businesses grow, you're going to need new services or maybe different services, and it's good to have those professionals still in your life and you still need to maintain those relationships. So you know what it takes to go to that next level based off of where you are in your business.
Kelly Scanlon:
Exactly. And those relationships are important on another level too. A lot of those organizations have an alumni group. Once you complete the program, you can still get together with the other business owners, the other entrepreneurs who went through it with you, and you can learn from your fellow business owners, you can gain insights from them as they grow. You can call them up or have coffee with them to bounce ideas off of them. And so there's on many different levels. Those relationships are critical.
Shakia Webb:
You are absolutely right. Not even just with the professionals, but with your peers. Peers can be mentors. Individuals who may be in the same industry as you, identify them because you can definitely help each other learn from each other and stand in contact and kind of brainstorming and bouncing ideas off one another. All of those things can be beneficial to an entrepreneur.
Kelly Scanlon:
So we've talked about these resource organizations, how vital they are to the ecosystem to helping get access to relationships, get access to funding and to other kinds of resources, you have a variety of grant programs, which you're right in the center of, that's where you operate, available to support entrepreneurs through these business development organization. So describe the scope of the grant program that you're involved with.
Shakia Webb:
A lot of the grants that I am managing, one would be to direct capitalization to CDFIs. You know, we did a grant last year to all cap. You know, we understand that while entrepreneurs should definitely have access and equitable access to traditional financing, but an alternative to that would be CDFIs. CDFI is a community development financial institution. So just like any traditional lending, obviously they will have a criteria that an entrepreneur would need to go through to be qualified to get a loan. Typically speaking again, I cannot speak directly on behalf of a CDFI, because I, myself am not a associate of one, nor do I run one. But what I will say is based off of, if you have maybe some challenges with access to collateral or even access to maybe like your down payment, they may have a little bit more flexibility just due to how they're naturally regulated. So someone who might be starting a business or maybe lead what would be called more of a micro loan would be able to access financing through alternative lending.
Kelly Scanlon:
So alt cap that you just mentioned is a CDFI
Shakia Webb:
Correct.
Kelly Scanlon:
So what are some of the other programs that you're involved with?
Shakia Webb:
Yeah, so we have done actually another direct capitalization to another CDFI, we have also worked with another organization who is putting together a inclusive lenders training, which essentially will address any type of cultural competencies as well as any biases or systemic racism as it relates to traditional lending. We should expect to see that program and curriculum be developed more so maybe third quarter or so this year I think they may be ready, but again, we did a grant to them last year.
Shakia Webb:
So essentially in my role, what I'm trying to do is just identify, what are their challenges, what are the gaps as it relates to access to capital? And we are working on, whether it be programming or initiatives that would address that.
Shakia Webb:
Kelly, to answer your question about some of the Kauffman programs. One, we just recently announced eight new grantees in our 2022 Heartland challenge. You know, this RFP invest in programs, projects, and initiatives that help develop a community that supports entrepreneurship. And particularly as we mentioned before, we talked about this already, just in underserved underrepresented communities. But instead of just here in the KC Metro, this will be focused on our mink states, which is Missouri, Iowa, Nebraska, and Kansas.
Kelly Scanlon:
So that's Heartland, it's regional, just as the name implies. I want to go back to you now through the lens of all of these experiences that you've had. What advice do you have for entrepreneurs who have been challenged in trying to secure funding. Your advice.
Shakia Webb:
Not underestimate relationships. To do your research again, but as I mentioned earlier, along with some of those other organizations that are designed to hold entrepreneurs hands. So again, you talk about your chambers, your entrepreneurship support organizations, which you may hear them be called ESOs, as well as your technical assistance providers. You know, all of those individuals are in place to help the bar move through or navigate through being an entrepreneur. You know, the entrepreneur is the expert in whatever it is that they do, whether it's a service that they provide or a product that they make. They're an expert in that. Right? And so then they are relying on those professionals around them to help guide them and prepare them so they can be ready for financing whenever that time comes for them to either grow or expand their business.
Kelly Scanlon:
Exactly. And I think your advice when working with a bank, like Country Club Bank for example, is to get to know the people at the bank before you have an urgent need, when you can't make the payroll, that's the wrong time to be trying to establish a banking relationship.
Shakia Webb:
Absolutely. That would be my advice. Whenever you first get that idea in your head that you're going to start a business, right away my advice is to establish that relationship with your banker. Because I would imagine you have set your finances separately, right? So not operating out of your personal account, but starting a business account. And on that onset start to build a relationship with that banker, because maybe that day you don't need access to financing, but you know, maybe you do in three months or six months and how much better would it be to be able to call someone up by name and say, Hey, I'm ready for this next step. Can you tell me what my next step should be?
Shakia Webb:
My advice would be one yes, establish that relationship. And then also look for those key professionals that you need to have on your team. You know, because again, as I said, the entrepreneur is the expert in whatever service they provide or whatever product that they make but look to those key financial professional service providers to assist you know, along the way. Whether that be someone that's helping you with your taxes, whether that be someone that is helping you, I don't know, business insurance, with product development, or business development, or marketing, et cetera. You know, there's a lot of programs out there in the Kansas City Metro area. Some are even free utilize those.
Kelly Scanlon:
Given all that we have talked about today and given the amount of investment that the Kauffman foundation does in the Kansas City area and increasingly for women and for BIPOC entrepreneurs, where do you see opportunity?
Shakia Webb:
Kansas City itself is just full of entrepreneurs. And again, flourishing entrepreneurs. I mean there's tons of opportunity here in Kansas City and businesses continue to be on the rise. Not only that support organizations also to continue to be on the rise because of the need of, to being able to address the start of all these businesses, right? Because no one organization can meet with all the businesses starting in Kansas City. So my focus has always been on the level of impact with the programs and initiatives that I work on here at Kauffman help bridge the gap. It closes the gap of those inequities that entrepreneurs face as they try to access capital in relation to starting their business, growing their business, expanding their business and by us targeting and assisting those types of entrepreneurs, it will uplift. It will continue to uplift, not just the KC Metro area, but our entire region as it relates to entrepreneurs.
Kelly Scanlon:
Absolutely. And then when they're ready for even more major growth, they will be perhaps in a better position to access that larger capital, whether it's VC, whether it's larger bank loans or whatever, it may be.
Shakia Webb:
Absolutely going back to that, just meeting the entrepreneur where they're at. I think if we have an opportunity for every entrepreneur, no matter where they are and we continue to keep our arms wrapped around them, there will be no way for them to slip through any crack. So again, closing those gaps by doing that, it will impact every entrepreneur in allowing every entrepreneur, the opportunity to start, grow or sustain a business
Kelly Scanlon:
Shakia, thank you so much for all the work that you're doing. The Kauffman foundation. We're so fortunate to have it in the Kansas City community and really appreciate the work that you're doing. Thank you for your time today to be our guest.
Shakia Webb:
Thank you Kelly so much for having me. It was a pleasure.
Joe Close:
This is Joe Close president of Country Club Bank. Thank you to Shakia Webb for being our guest on this episode of Banking on KC. Kansas City's entrepreneurial ecosystem drives economic vibrancy for our local communities by creating an environment in which new and growing companies can thrive. The nonprofit ESOS or entrepreneurial support organizations are a major part of the ecosystem. They work to provide entrepreneurs with access, tools, connections, and other resources entrepreneurs need to be successful. Fortunately for Kansas City, the Kauffman foundation chooses to invest in our local entrepreneurial ecosystem, especially in the programs the ESOS offer. Many of these programs focus on issues surrounding capital access for entrepreneurs. We welcome the opportunity to sit down with our local entrepreneurs to discuss your funding needs. Thanks for tuning in this week. We're banking on you Kansas City Country Club Bank member FDIC.