These Black CEOs Couldn't Get a Loan (Now They Run Some of the Fast-Growing Companies in America)Bookmark this
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Black CEOs run 73 companies on this year's Inc. 5000. If you're thinking that doesn't sound like a lot, you're right--that's only about 1.5 percent of the companies that made the cut, based on revenue growth over the past three years.
Nearly half of the businesses with black CEOs cluster around our nation's capital--in Virginia, Maryland, and the District of Columbia--and a third overall provide services to government agencies. The remaining companies are spread among five Southern states, plus California, Michigan, New York, and New Jersey.
While this is just a sample of the entrepreneurial landscape in America, the U.S. Census Bureau's data on African American-owned businesses is only a little higher. In its most recent Survey of Business Owners in 2012, a little over 9 percent of companies had black owners--up from 7 percent in 2007.
Even compared with other minority-run businesses on the Inc. 5000, 1.5 percent is low. CEOs who identified as East Asian make up 2.4 percent, and Hispanics or Latinos represent 3.8 percent.
So what gives? Why aren't more African Americans breaking into the elite ranks of fast-growing companies? History plays a large role, says Algernon Austin, senior research fellow at Washington, D.C.-based think tank Center for Global Policy Solutions. Long-term, systemic oppression has had a dampening effect on entrepreneurship within African American communities. In particular, Austin points to three key problem areas: access to capital, formal education, and personal relationships within the business community.
This isn't to say that black CEOs on the Inc. 5000 haven't also struggled with these issues. But their ability to overcome them should be instructive. Here's what a handful of fast-growing company founders had to say about overcoming financial adversity.
A sympathetic ear
The key to getting a business financed when you lack personal wealth or connections to investors is to form relationships with bankers, say several Inc. 5000 CEOs. These are often loan officers at small, local banks who are willing to take the time to get to know an entrepreneur and discuss business plans. Anastasia Gentles, cofounder of Sugar Land, Texas-based Nightlight Pediatric Urgent Care (No. 2,306), says catching the ear of a female banker at Louisiana-based Whitney Bank who understood the importance of what she and her two co-founders were doing was the turning point in her business's early days.
"My daddy doesn't have deep pockets," Gentles says. "There's no family legacy to fall back on." But a banker who was willing to take a chance on them and work out a loan plan helped get her business off the ground. This is Nightlight's third appearance on the Inc. 5000, and in the past three years, its revenue jumped over 150 percent, to nearly $6 million in 2015. Its staff also more than doubled over the period, to 76, from 30 in 2012.
Edwin Bosso of Houston's Myrtle Consulting Group (No. 364) saw its revenue surge 1,000 percent in the past three years, to nearly $9 million. But when he needed to raise capital for his company, he also struggled to with landing a loan. It's tough, he says, "Especially if you're a service company, like we are. We don't have assets to serve as collateral for banks to seize, so we had to find a bank that could take the time to understand our business and tailor a funding approach to what we do."
A helping hand
Ranking at No. 200 on the Inc. 5000 is LLB Enterprises, a Stafford, Virginia-based consulting firm founded by Lori Burke. She says she could get neither a traditional bank loan nor one backed by the Small Business Administration when she was starting out. For the funding she needed, she relied on another small business--a firm called Kaleo Construction--to prop her up until her company could stand on its own. Burke says even though she didn't come from money and didn't yet have substantial revenue, Kaleo's owners had faith she would succeed financially and pay them back. And she did. Her company is the fastest-growing company led by a black woman on the 2016 Inc. 5000.