Thank you very much. Do we have copies of your testimony?
Yes. You should have. I sent it over, I think, on Thursday.
Okay. No problem. I just wanted to make sure. Any questions? (No response.)
Thank you. Please identify yourself for the record and proceed with your testimony.
Sure. My name is Laura Schwingel, and I'm the Director of Policy at National Community Capital Association, which is a Philadelphia-based national network of more than 125 leading community development financial institutions working in all 50 states. I just want to say good afternoon and thank you for the opportunity to testify here today. I'm going to actually speak to CDFIs as 151 11/12/02 - COMMERCE - RES. 000691, 020522 community reinvestment vehicles. We've heard some really great, inspiring stories about some of the great work that CDFIs are doing in here, such as Community Capital Works, the Reinvestment Fund and Sustainable Jobs Fund, so I'm going to focus my efforts sort of on CDFIs as a field, my remarks. CDFIs are one key component in bank reinvestment strategies in Philadelphia, and the Philadelphia CDFI fund can bolster that effort. The ultimate goal must be to connect underserved communities to the financial mainstream, and vice versa. With expert knowledge of local markets, the provision of critical technical assistance and the ability to manage risk well, CDFIs are an ideal vehicle to channel the flow of capital and credit to people in communities that lack financial resources. CDFIs are private financial institutions with the mission of community development that operate just outside the margins of conventional financial services. In Philadelphia, there are 20 CDFIs that invest and lend capital to create opportunities and benefits for economically disadvantaged people in communities. The CDFI industry finances business 152 11/12/02 - COMMERCE - RES. 000691, 020522 from start ups to expansion. They fund -- finance affordable housing and community institutions ranging from Charter schools to arts facilities, which you've heard about in the previous testimony. Business finance ranges from the microenterprise to mid-side companies. Some CDFIs also provide consumer finance and venture capital. CDFIs serve and cultivate markets that banks and other conventional financial institutions usually do not reach. And that is what prompted them to come into being. Banks do invest in CDFIs, and it's been a growing opportunity. Since 1995, bank financing of CDFIs has more than quadrupled, making banks one of the fastest growing sources of CDFI capital, according to National Community Capital's most recent annual survey. In addition, the average size of bank loans to CDFIs has more than doubled to over $270,000. Several factors have been critical to this growth. The 1995 Community Reinvestment Act revisions explicitly recognized loans to and investments in CDFI. Banks know that regulators will recognize their work with CDFIs, and the Community Reinvestment Act has prompted significant 153 11/12/02 - COMMERCE - RES. 000691, 020522 increases in direct lending and investing by banks and new partnerships with CDFIs. CDFIs have also demonstrated an impressive record of making effective and prudent use of bank financing in serving and developing markets that banks have been unable to serve. The National Community Capital survey found that CDFIs on average have grown more than 38 percent over the past decade, fully deployed their capital, and yet experienced loss rates of less than 2 percent, which is comparable to that of the best banks. That financing has helped produce more than 140,000 jobs and 120,000 housing units nationwide. CDFIs have helped banks reassess their initial perceptions of risk in unconventional markets, and many banks responded with innovative strategies for reaching markets they once ignored or missed. Banks have entered untapped markets often in partnership with CDFIs. To find a model for encouraging banks to increase their investments in underserved markets, City Council need do no more than look in its own backyard and in its own state. The State of Pennsylvania has established the largest and most successful state 154 11/12/02 - COMMERCE - RES.
000691, 020522 CDFI program, the Pennsylvania Community Development Bank. Established to strengthen the CDFI infrastructure across the state, PCD Bank makes capital available for community and economic development lending and provides capacity building and technical assistance grants to promote the creation and expansion of CDFIs within distressed communities. And PCD Bank has leveraged nearly $19 million in bank commitments for the program and had served as a national model for state support of CDFIs. Philadelphia will also benefit greatly from the proposed CDFI fund for Philadelphia. A CDFI fund at the City level would complement the federal and state CDFI funds and help build the capacity of CDFIs serving Philadelphia. This fund would supply performance-based financing to CDFIs, which would provide an incentive to enhance capacity. This kind of a fund would also leverage private sector support, a key way to spur bank investment into the City. These strategies will result in stronger CDFIs that better meet the needs of the City's economically disadvantaged people. Banks have effectively partnered with 155 11/12/02 - COMMERCE - RES. 000691, 020522 CDFIs to deliver mainstream and alternative financial products and services to underserved communities to cultivate future customers and enhance public and community relations. CDFIs, however, cannot be the whole answer. They possess neither the resources nor the financial capacity to meet all the credit and capital needs of poor communities. Ultimately, mainstream financial institutions must bring more resources to bear on this enormous challenge. CDFIs are one element of what needs to be a larger investment. CDFIs are effective, market driven, private sector institutions that make excellent use of limited public resources and lead the way into underserved markets. They create jobs, help to provide affordable housing, improve access to child care and build individual and family savings. CDFIs have made great strides in bringing capital to underserved communities, acting as conduits between mainstream financial institutions and developing communities. CDFIs demonstrate that high risk lending is not only good for communities, they are good for business. Thank you.
Thank you. 156 11/12/02 - COMMERCE - RES. 000691, 020522 Any questions? Councilman Goode.
Good afternoon. As you are probably aware, the City of Philadelphia is trying to establish a Philadelphia CDFI fund. There was an Appropriation Bill appropriating five million dollars to that fund. There was also a Women's Business Finance Bill that says that half of that money -- 51 percent of that money has to go toward small business capital investments, and 51 percent of that has to go toward women. If the banking community, organized by GPUAC and their Committee Community of Economic Development, were to leverage that City investment, and we looked at CDFIs as a vehicle for doing small business lending throughout Philadelphia, what capacity do you think the CDFI industry is in Philadelphia in terms of the amount of capital they could place in terms of small business lending?
I mean, I don't think I have a specific number. You know, the field has been growing a lot. The fund would make a definite difference in the capacity of CDFIs to meet that constituency's need. Some CDFIs have already been 157 11/12/02 - COMMERCE - RES. 000691, 020522 working in small businesses -- small businesses lending, but I don't think we've seen where that can go, by any means. I think that more private sector investment is definitely needed.
In terms of your own capacity, you would be in a position to turn around such a bank investment and City investment in terms placing capital in CDFIs for small business lending?
How long would that take? Would that be 30-60 day period, six-month period?
Okay. I'm really asking about your capacity as NCCA in terms of placing capital. How much capital could you handle in terms of placing it in CDFIs?
Well, I think that the five million dollar appropriation would be very manageable by our organization. And we can turn around money pretty quickly, I mean, in as fast as 60 days. There's definitely been a history of us doing that because that's part of what we do, is we 158 11/12/02 - COMMERCE - RES. 000691, 020522 take money and invest in CDFIs.
So you could or could not manage a $20 million private investment on top of that?
Thank you very much. Mjenzi Traylor from the Department of Commerce.
-- Councilman Nutter and Members of the Committee on Commerce and Economic Development. My name is Mjenzi Traylor, and I'm First Deputy Director of the Commerce Department, and I'm here today to present testimony on Resolution 000691. And I will simply at this point just go over some of the highlights of that testimony. I think you all have copies of it. First, let me state that the Commerce Department supports and actively participates in initiatives programs and strategies that promote the economic well-being of businesses. We recognize 159 11/12/02 - COMMERCE - RES. 000691, 020522 that by supporting the development of microenterprises, we increase their chances for success and we improve their ability to contribute to the economic prosperity of the communities they serve. We also recognize their potential for creating jobs for the unemployed and underemployed sections of the population. The Commerce Department and our economic development agencies, inclusive of Philadelphia Commercial Development Corporation and Philadelphia Industrial Development Corporation, continue to stand ready to implement and support strategies that aid in the development of microenterprises. As a part of an economic development strategy, microenterprise financing has two types of benefits. First, there are the direct benefits that are associated with the entrepreneur receiving the financing and using it for business. Secondly, there are indirect benefits that spill over to other parts of the economy through the creation of jobs and increase in tax collections and spending. Within the City, the Philadelphia Development Partnership is without equal. You have heard about the agency when they gave testimony 160 11/12/02 - COMMERCE - RES. 000691, 020522 earlier today. The Commerce Department has assisted in the funding of PDP's micro finance program. This organization is crucial to the very survival of businesses at their most basic level. Loans go to borrowers who plan to start maintaining and expand very small businesses. Through small loans targeted to the small entrepreneur, this level one micro finance promises to create new livelihoods and enhance capacity for self employment and improvement, which can manifest itself in the form of improvement and upliftment to the neighborhoods. There is also level two micro loan program -- a level two micro loan program, which is the City's vehicle to support financial assistance at the next level of business development. This program aims to provide small businesses with greater and more reliable access to financial services. The Philadelphia Small Business Micro Loan Fund was created as a result of the commitment of funds from over 13 banks to provide micro loans from $5,000 to $25,000. This would be one of the first to be approached by those businesses that outgrow PDP's program. PCDC also offers a number of 161 11/12/02 - COMMERCE - RES. 000691, 020522 other loan programs, including the Small Business Revolving Loan Fund, the Housing Contractors' Program and the Comcast Loan Fund, catering especially to small businesses. For instance, HCP's primary mission is to increase the small business contractors' access to contract opportunities while simultaneously supporting the City's efforts to rehabilitate substandard housing in low-income neighborhoods. As was mentioned earlier, business training is an important component of the business development process. Many microenterprises are not formally registered and do not pay taxes. As we work with microenterprises, they come into the formal system. While we support financing, we also see the need for training. The training recognizes that human capital constraints are just as great or sometimes even greater than financial constraints. And by the way, to answer a concern that I believe was raised by you, Mr.
Chairman, earlier about how some of it these -- or maybe it was Councilman Clarke, I guess, who raised the issue of how some of these businesses that are not licensed are managing to come out of that. We have been able to sort of 162 11/12/02 - COMMERCE - RES. 000691, 020522 nudge the efforts along for helping those kinds of enterprises. There's a credit repair program now that's underway over at PCDC, and I think that's going pretty well, and we have some successful cases to show that there's more support that's needed for that kind of activity. Note that PDP's technical assistance programs even focus on personal development and social issues. These programs are designed not only to teach business skills, but also to develop new and viable organizational skills and personal growth while moving the entrepreneur from unemployment or underemployment into self employment. Recognizing that there were additional needs of small businesses that were not being met, the Commerce Department created the child care program and we funded it and it's administered by the Women's Business Development Center. The child care program provides funding for a license and permit fees, up to $750 to child care providers. This program has two important benefits. First, it creates jobs and, secondly, it facilities someone working by providing a safe place to leave the children. 163 11/12/02 - COMMERCE - RES. 000691, 020522 Microenterprises are the precursor for small and mid-size businesses. And these businesses employ over 50 percent of the nation's work force and are the greatest source for new jobs. While microenterprises may be small in terms of employment and sales, they are meaningful in the lives of the participants and their communities. They are also meaningful to the City. 3 million of Business Privilege Taxes out of a total of $281 million. This was percent. 14 The microenterprise sector and thus the 15 potential for microenterprise support services is 16 significant. The Small Business Administration 17 estimates that at least 7 percent of the population is self employed or thinking of opening a microenterprise. Self employment is a viable option for many. In fact, most of the self employed also work at least part time for wages. With current economic uncertainty, it makes sense for to us to support these ventures into full-time occupations. During the '90s we were aware that something was missing in the then current model of 164 11/12/02 - COMMERCE - RES. 000691, 020522 economic development. We were and still are at a critical point in the City's economic recovery where we are seeking to replace lost jobs, businesses and residents. We are also seeking to enhance the City's tax base and improve the City's revenue stream by way of business and economic development. We recognize the importance of small business development and the recovery process and we have tried to strengthen the support programs. By supporting PDP, PCDC, WBDDC and other microenterprise programs, we are supporting a pipeline of potential small and mid-side businesses. For instance, had we done some of the microenterprise development that PDP is doing right now earlier, then the pipeline into our Philadelphia micro loan program would have been one that would have found people getting through it more successfully, because they would have had that earlier experience at the microenterprise level. Through microenterprise development, individuals, regardless of their economic status, can improve their income through hard work and free enterprise. Microenterprise stimulates personal responsibility and may promote neighborhood 165 11/12/02 - COMMERCE - RES. 000691, 020522 stability. Small entrepreneurs are less likely to move away from their neighborhoods. We support this Resolution and we'll be pleased to answer any questions you may have.
I believe there are no questions. Thank you, Mr. Traylor. Lynn Cutler from Women's Opportunity Resource Center.
Good afternoon, and thank you for the opportunity to present. I'm Lynn Cutler, president of the Women's Opportunities Resource Center, and we work with low income, underemployed and dislocated workers to start their own enterprise business. We're the oldest microenterprise program in Philadelphia and one of the earliest in the nation. We got the Poverty Alleviation Award from the US Department of Treasury in 2001 for poverty alleviation. We've had over 1,600 people complete our training since 1984. Approximately 45 percent have started businesses and 50 percent of them have stayed in business over time. We also created a CDFI back in '99, the Economic Opportunities Fund through the Pennsylvania Community Development Bank initiative. And we have 166 11/12/02 - COMMERCE - RES. 000691, 020522 been able to do 43 loans, $81,000 since that time, direct. And then we have a bank partnership program that we've been operating where we've done about $400,000 today. I have two things I'd like to emphasize. One is the importance of microenterprise as a poverty alleviation strategy. There's a recent study from the Corporation for Enterprise Development that I'd be glad to share afterwards that talks about the importance of asset development, Policies and Asset Development Outcome. And they looked at all of the states and ranked Pennsylvania where we stood. And what you have is one out of five people, families, are asset poor. And they define that as not having enough assets to survive for more than three months. If they should lose a job, if something happens to them, they get sick. Also, women's businesses in terms of formation in Pennsylvania is 44 out of 52 states. And you have to wonder, even with all the effort that we've done, why this isn't stronger in Pennsylvania. And I'm sure the numbers, if we looked at them, would be worse in Philadelphia. And 167 11/12/02 - COMMERCE - RES. 000691, 020522 I'd like to suggest that we look at this study and look at if there's some comprehensive policies that could be done to support more asset development. I know you were talking about predatory loans and making things more transparent. But I think that there's something in the study used to take this one step further. Second point I'd like to make is -- reinforces what was talked about in terms of the importance of comprehensive services for micro loans -- micro entrepreneurs. You need the training, the individual business assistance, the loans and access to contracts. And given the recent federal landscape, I think it's going to be even more important that the City invest in this comprehensive approach. Thank you. And if you have any questions, I'll be glad to answer.
Great. Thank you very much for your testimony. 168 11/12/02 - COMMERCE - RES. 000691, 020522 I have two last people on the list. Their names are George Butts and Jackie Hill. Is there anyone else who is anticipating testifying who has not put their name in? Okay. After those two people, then you can come up. Mr. Butts.
Good afternoon. My name is George Butts. I'm here today as a member of ACORN. ACORN is a grass-roots community organization made of 5,500 low-income members here in Philadelphia coming together to fight for changes in our neighborhoods. I'm also here as national president of ACORN Housing Corporation, a progressive loan counseling organization making sure that low and moderate-income folks can get loans to buy homes and build wealth. We at ACORN and ACORN Housing applaud Council's efforts to monitor bank lending in our communities, especially since major banks in our City are still not doing the job they should be doing in low-income neighborhoods. Last month ACORN released a study documenting increased racial income disparities in 169 11/12/02 - COMMERCE - RES. 000691, 020522 the mortgage lending market. The report analyzes data on a national scale and in 68 metropolitan areas, including Philadelphia. Nationally, the studies find that in 2001, African Americans were over twice -- 2.31 times as likely to be turned down for conventional mortgages as white applicants. And Latinos were rejected over one-and-a-half times more often than whites. This disparity is greater than it was in 2000, and an even bigger increase from what it was in 1996. In some of the cities, the disparity is even more alarming. Residents of all races in low-income neighborhoods are over three times more likely to be denied than residents of upper-income neighborhoods when applying for a conventional home purchase mortgage and increased disparity from 2000. In the Philadelphia metropolitan area, disparities are even more extreme. African Americans were 3.31 times as likely to be turned down as white applicants. And Latinos were rejected 2.5 times more often than whites. These disparities are greater than they were in 2000 or in 1996. Residents of all races in low-income Philadelphia neighborhoods were 5.4 times more likely to be denied than residents of 170 11/12/02 - COMMERCE - RES. 000691, 020522 upper-income neighborhoods, an increase from 2000. Upper-income African Americans and Latinos in Philadelphia were more likely to be denied than moderate-income whites. This lack of access to traditional credit sources has resulted in the disaster of predatory lending in our low-income communities. Despite an enormous amount of press the City attention focused on the issue of predatory lending, predatory lending is reaching epidemic proportions in Philadelphia. This month ACORN will be releasing a study on the increases in subprime lending and foreclosure rates. Preliminary data shows that the foreclosure rate in Philly is still on the rise. People are seeing their homes stripped away brick by brick. Until banks make a real commitment to low-income neighborhoods, predatory lending will continue to rise in Philadelphia. That concludes the testimony, but I have a couple of comments I think I'd like to make. I think one of the things we -- we've been doing this a long time. We've been doing this since the '80s. And because we have such national reach and we can look at national patterns, some of the things that 171 11/12/02 - COMMERCE - RES. 000691, 020522 happen, the conclusions that we're drawing, is that the mainstream banking community has abdicated their responsibilities to our neighborhoods. And because they did that, that left the vacuum that the predators were more than happy to fill. And, you know, in the '80s and in the early '90s, the problem was access. We couldn't get financial products in our communities. Now, the problem is what kind of access. And it seems like the only kind of access you can get is predatory loans in our communities. And even though a lot of the banks in Philadelphia are trying really hard to do some good things, when you look at them globally and you look at what they do as the whole bank, there are things that they could be doing that they aren't doing. That's all I have to say.
You recently conducted a formal study of disparity in home mortgages. Could you forward a copy of that to my office and to the Chair to be incorporated into testimony for this hearing?
Thank you. 172 11/12/02 - COMMERCE - RES. 000691, 020522
Thank you very much. Jackie Hill is no longer here. Ma'am.
Good afternoon. Please identify yourself for the record.
Okay. My name is Leslie Estelle Banks, and I appreciate your time. I was supposed to testify with the Philadelphia Development Partnership as an ex-board member, and something happened. We got a little messed up here with the list. But the purpose of my testimony is to come as a practitioner in the microenterprise field. I've had 10 years as an instructor right at the front line, grass-roots level, as well as a director for the Ben Franklin Technology Partnerships Micro Loan Program. And we at that time became number one in the region. We did 88 loans. We were a partner, a strategic partner of PDP's and, at that time when I took over, we had a 57 percent default rate and brought it down to 6 percent. And I wanted to talk about some of the 173 11/12/02 - COMMERCE - RES. 000691, 020522 strategies, but I also want to talk about those strategies from a very personal perspective because I'm also an entrepreneur. Back in 1991 I had become a sales executive and I was working in corporate. I came out of the University of Pennsylvania Wharton School and went right on the corporate track. I was not involved in microenterprise, per se. However, what happened was a life-altering event. My daughter was involved in a very bad day care center accident where she was burned down a significant portion of her body. surgeries. I was no longer in 14 corporate America. There was no safety net out 15 there in the corporate environment, so 16 entrepreneurship literally saved my life. What I 17 had was a $100,000 worth of bills after very good insurance. There was no case money involved because the person involved in this mishap -- it was an accident -- had no commercial insurance and some of the safety nets available. So here I am, a divorcee, single parent now, with $100,000 worth of medical expenses, and I became an entrepreneur right then on the dime. And there's an old Biblical saying 174 11/12/02 - COMMERCE - RES. 000691, 020522 about, do not despise small beginnings. Well, this business got started with $2,500, okay. And it was a gift basket company. So it wasn't some lofty type of business that you would think, oh, a Wharton grad. No. Let me tell you, it was started at my kitchen table pulling my hair out trying to figure out how to pay bills. That experience actually -- and I'm a Philadelphia resident. Always have been. And I came back to Philadelphia and opened up my business at 4601 Market Street in an incubator. That is kind of the basis from which. And I found that, as I ran this business and I paid off those bills without going bankrupt, okay, the microenterprise situation that I was in gave me the flexibility to not have to leave my child at day care, because, needless to say, I had serious issues with that. It allowed me to take care of those obligations. And I watched A-1 credit from a very good six-figure income as a sales executive for a big computer company go to nothing. My credit went from A-1 status to hell in a hand basket, quite frankly. However, through microenterprise I was able to build it back. I say all this to say, over that course 175 11/12/02 - COMMERCE - RES. 000691, 020522 of time, a small business allowed me -- a gift basket business allowed me to employ eight other single mothers for that period of time. It allowed me to come back from the ashes. And I started teaching people entrepreneurship inadvertently because I had to be away from the office so much, with a surgery -- reconstructive surgery schedule 9 and then physical therapy for that child. 10 I then realized, oh, my goodness, I can 11 teach entrepreneurship because I've learned it from 12 grass roots, from the ground, up. And I wound up 13 working with many organizations that have appeared 14 in this room WORC, Ben Franklin, PDP, Lutheran 15 Children and Family Services. I think I've talked 16 for almost everybody in the City.
So when I say 17 that I've been out in the trenches, both as a practitioner and an entrepreneur, this is what I saw at that Ben Franklin program -- and this was as an SBA lender at that point -- and this is what I've come to know. Number one, the -- Councilman Clarke spoke about predatory lenders and the reason why people are flying under radar and cannot become legit is because predatory lenders have gotten there 176 11/12/02 - COMMERCE - RES. 000691, 020522 first. So their credit is jacked. Their credit is so bad. Let's just take credit as one issue. We're not even talking about other things like incarceration and tax issues. But their credit is so bad that there needs to be the credit repair, and it's not the standard credit repair. It's triage credit repair. Because people are not getting 9 percent. Try 29 percent, 24 percent. So when I 10 started the micro loan program -- or restarted it at 11 Ben Franklin because it was on hiatus. They had 12 lost a director. The first thing we had to do was 13 create an amnesty program so that people could come 14 out of hiding, and give people a 6-month window 15 where they didn't have to repay that loan. It's 16 called patient capital. Because during that first 17 -- during those start up and get back and restart 18 your life, you cannot afford, especially if you're 19 undercapitalized, to pay the loan at the same time 20 you're trying to put money into the business. It 21 just doesn't work like that. Patient capital was one issue. The second thing -- now, I was lucky. I had patient capital. The $2,500 was my $2,500 so -- and I made credit card companies be patient. Now, I 177 11/12/02 - COMMERCE - RES. 000691, 020522 had something else going for me even with all the trauma it was -- I had a good academic foundation, but also I had been out there for years doing 5 marketing and I knew how to do the analysis. And I 6 also had a network of people I could pick up the 7 phone and call. So I could call a lawyer that was 8 my friend that did not charge me. I could pick up 9 the phone and call an accountant that would do my 10 books for free. You see, technical assistance services that all these microenterprise organizations are talking about, it costs money. So the second thing we did was, we layered onto the program free technical assistance from the best of the best. And we took the monies that came to the program and paid small minority-based, community-based businesses that were accountants -- that small law firm, that small accounting firm, to work with the small businesses in the area and partnership. And we paid their fees so that they could keep their lights on, but so that the small business itself that was struggling to come back from the ashes that had tax problems could work out a tax payoff situation with the IRS so that they could then get a loan and become bankable, so that 178 11/12/02 - COMMERCE - RES. 000691, 020522 they could work out their legal issues while still trying to live, to answer Councilman Clarke's question. We did the educational piece to go back to what Councilman Ortiz was talking about, to make people aware -- percent, 29 percent. Even though 8 you really want to start that business, it's not the 9 thing to do. Those were the kinds of things that 10 had to come in. 11 And then the other component that I 12 would want to stress that several people in the room 13 have said before is access to contracts. See, there 14 can be no real change if a small business, number 15 one, can't get the money to start up and that 16 start-up money that they get is tied to a home. And 17 let's understand, too, that Philadelphia has high 18 home ownership basis, and people are living in 19 grandmom's house, mom's house. And if small 20 businesses fail on the first couple of tries and a 21 predatory lender has his claws in that home, what you're going to see is an erosion of home ownership.
People's homes that are now home to several generations are going away from our community. So that gets into what Councilman Goode was talking 179 11/12/02 - COMMERCE - RES. 000691, 020522 about looking at neighborhood transformation. If you lose your home ownership base, your neighborhoods cannot transform. That cannot happen. If people don't have access to the capital to buy the services and the goods that they need to run their business, and then they don't have access to technical assistance to keep them on track as they learn and grow, and then they do not have access to larger business contracts, all of this is moot. The business community has to step up. The corporations, we already understand they cannot absorb the number of jobs that are needed in just a job situation. That's a reality. But they certainly can extend the contracts for services out there. And microenterprise, while it starts as a very small thing, microenterprise does not have to stay micro. The goal should be wealth creation. 00 an hour job for that person and not cover their medical and dental expenses and is not going to truly grow to be a comprehensive business that can take care of all of the person's needs, then you 180 11/12/02 - COMMERCE - RES. 000691, 020522 might as well have, you know, a small job creation program. It's really critical that these businesses take form and take route in the community because they do more than just provide area jobs. The people who are entrepreneurs, those are the folks that are taking care of the little league programs. They are the people who are funding all kinds of things going on in our communities today. And the last thing I would like to say on that is entrepreneurs need the flexibility. Because I myself am a serial entrepreneur. I went from gift baskets to being an author, and that's what I do now to stay afloat. Who knows who I may become. Who knows, gift baskets or romance author. But the point is, is that all along the projectory of an entrepreneur's life span we do have a kind of a patchwork quilt of agencies and organizations, but somehow at the micro level, people fall through the cracks. It's nothing -- no real comprehensive network that is funded like infrastructure. I'm saying it again, funded like infrastructure to get people from -- when the bottom has fallen out from under them and the safety net has gone, to get them to that first rung in that whole microenterprise 181 11/12/02 - COMMERCE - RES. 000691, 020522 environment. Because anything under $25,000, the banks don't want to really service because it costs just as much to service a $500,000 loan as it does to service a $50,000 loan. Guess where their interest lies right now? So if we look at the entire landscape, the foundations are pulling out because what has happened with September 11th and the tragedy that hit our nation, a lot of monies got diverted toward that effort, and rightfully so. But in addition to which, the Wall Street situation has tanked their portfolios, so the William Penn Foundation and the Philadelphia Foundation and all of the ones here, they don't have the same amount available to give to the microenterprise organizations who were using those funds to hire staff to go do what Councilman Clarke said. You know, to get somebody who is incarcerated a loan is a real one-on-one labor intensive situation, so these agencies are not lying when they say, we need more dollars. All of them do. Because if you want true technical assistance, that's a one-on-one process and the foundations that heretofore used to finance that are not giving out the grants to that level. 182 11/12/02 - COMMERCE - RES. 000691, 020522 The state whose monies went floating on Wall Street too does not have -- and the Department of Community and Economic Development is not giving out the same substantial sums, so we do need a comprehensive infrastructure put in place so that people don't fall through the cracks.
Because if the corporations are not hiring and the self-employment market is starting to erode because the funds are not there for technical assistance, loan dollars, post business start-up dollars and the ability to grow with the entrepreneur as they grow, then we're in trouble. So thank you very much. )
Thank you very much. Is there anyone else here to testify on these two Resolutions? (No response.)
Seeing none, the Committee has already taken action on Bill 020648. It was reported out with a favorable recommendation 183 11/12/02 - COMMERCE - RES. 000691, 020522 and suspension of the rules. With regard to the two Resolutions, 020522 and 000691, this Committee will stand in recess to the call of the Chair. Thank you very much. (Applause.) (Council adjourned at 2:00 p.m.) - - - 184 ¡›î› C E R T I F I C A T I O N I HEREBY CERTIFY that the foregoing proceedings of the Council of the City of Philadelphia of November 12, 2002, were reported fully and accurately by me, and that this is a correct transcript of the same. RE: COMMITTEE ON COMMERCE AND ECONOMIC DEVELOPMENT ___________________________ Lisa C. Bradley, RPR and Notary Public