Microloans for Manatee entrepreneurs

Nonprofit group helps start-up businesses

chawes@bradenton.comSeptember 12, 2011 

BRADENTON -- Tucked away in a colorful, cozy room in east Bradenton, three toddlers practice manners, take time out to color an angel and play on backyard swings. They eventually settle down for a nap under the watchful eye of Valerie Matthews.

A few miles to the west, Melody Pappagallo adds even more fur to the floor as she uses scissors for final touches to a customer’s formerly fluffy dog.

The two women couldn’t be more different. Matthews, owner of the new Matthews Family Home Daycare, is soft-spoken and is starting her dream business for the first time. Pappagallo speaks with an inherent gruffness and is restarting a dog grooming business, Mel’s Head to Tails, she ran for almost two decades but had to close because of a personal crisis.

But they have one big thing in common: Matthews and Pappagallo are both graduates of a new program designed to help low-income people start successful businesses. They each received loans for a few thousand dollars after demonstrating that they were committed to their business ideas, and ready to take on the responsibility.

The program is offered through Suncoast Community Capital, a two-year-old nonprofit group that received a federal grant last year of more than $300,000 to fill a gap of lending that exists for small businesses. By the end of 2013, Suncoast is charged with helping 30 people from Manatee and Sarasota counties who would be considered low-income start or expand their businesses and generate at least 55 full-time jobs.

“We work on creating economic opportunity in underserved communities,” says Mike Kennedy, Suncoast’s executive director. “We’re specifically focused on micro-entrepreneurship and micro-capital, and specifically for the purpose of helping people that live and work in distressed communities to become economically independent. We find and train people to start or expand micro-businesses.”

The vast majority of banks won’t make loans of less than $5,000 to small businesses, Kennedy says. In fact, most banks won’t make loans of less than $125,000, because the underwriting costs of doing so eat up the bank’s potential profits.

But through the federal grant, and working with the Manatee Federal Community Credit Union, Kennedy says his organization is part of a growing movement that recognizes just how important small businesses -- especially “micro” businesses with less than five employees -- are to the economy’s overall health.

“Eighty-five percent of the businesses in our country are considered micro,” Kennedy says, citing information from a recent report by a group called the Association for Enterprise Opportunity. “If just one in three of those businesses added just one employee, our country would be at full employment.”

Other statistics from the association show that running one’s own business can make a huge difference in the lives of the minority populations that struggle disproportionately with poverty.

The net worth of business owners overall is about 2.5 times greater than non-business owners, according to the association’s report. But for a Latino man, that number jumps to five times greater net worth and for an African-American woman, being a small business owner can increase her net worth by 10 times.

“This is evidence of why we do this work,” Kennedy says.

So far, Matthews and Pappagallo are the only people to make it through the program. That’s because many are either making too much money, not really committed to starting their own business, or unable to sort through other issues that may interfere with their business plans, such as poor credit, difficult family situations, or lack of a high school diploma or general education degree.

“We don’t provide assistance unless we can see from them a passion and a commitment,” says Bob Terry, an educator with the Manatee Community Action Agency, which partners with Suncoast to administer the federal grant program. “We also say there has to be a turn-around to provide assistance to people. We take a comprehensive approach and focus not only on the business but on the individual, too.”

Matthews, who remembers being devoted to child care from an early age, says she used to talk for years about starting her own home daycare business. With a large family network in support of her dream -- including a husband who says he’s proud that she finally followed through -- Matthews mostly needed training in accounting.

She used her $2,200 loan for toys and the colorful education decor that adorns the walls of her childcare room, including information on the alphabet, long and short vowels, colors, and building character. Matthews also needed to make a few adjustments to her backyard in order to meet guidelines from the state Department of Child Services.

Pappagallo, who had to leave Bradenton for a few years to care for her mother as she was dying of cancer, also focused mostly on sharpening her accounting habits. Given the competitive industry of dog grooming, Pappagallo used most of her $3,000 loan for advertising, including starting her own website, printing fliers and getting a Yellow Page ad.

Both now work with an accountant, which is one of the program’s requirements. Both also say Terry’s constant nurturing of their progress has been essential to their progress. In addition to helping participants create business plans, Terry helps them prioritize their needs and follows their progress even after the program is finished.

“Bob has high expectations of everyone that’s coming out of the class, and he really likes to give us homework,” Matthews says. “He’s also very kind. I could call him a hundred times and he would still always be happy Bob.’

“I really appreciate Bob’s compassion for people,” Pappagallo says. “He really wants to get people going into business so that they can be successful.”

People interested in learning more about Suncoast’s program need to reserve a spot in its monthly orientation, held the fourth Thursday of every month, by calling (941) 744-2666 or emailing info@suncoastcc.com.

Christine Hawes, Herald business writer, can be reached at (941) 745-7081.

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