The days of waiting for the next big industrial project to save a fragile rural community are becoming extinct.
That handwriting has been on the economic development wall for years, but the depth of the Great Recession made turning the corner on new initiatives more difficult.
"When the national economy gets a cold, Delta small businesses get the flu," said Chris Masingill, director of the Delta Regional Authority (DRA). "The key to moving forward is that many entrepreneurs see this moment as an opportunity to build their dream."
Masingill’s DRA signed a memorandum of understanding on Thursday with the U.S. Small Business Administration (SBA) in an effort to boost access to start-up resources for small businesses as well as recruit smaller players with affordable capital to the Delta.
The DRA’s territory covers 252 counties or parishes in 8 southern states where the per capita incomes of nearly 10 million Americans are at or below the national average. The poverty rate in this region is 55% higher than the national rate.
THE NUMBERS DON’T LIE
The DRA-SBA venture seeks to reverse a trend that was exacerbated by the massive economic downturn of 2008 and 2009, and subsequent struggle in the recovery period since then.
In the Arkansas Delta, small business loans for start-up businesses – known as SBA 7A loans – dropped off dramatically as fewer entrepreneurs had the ability, access or courage to try their luck.
With total loans of $55.5 million in 2007 as the baseline, the SBA saw lending plummet 32% in 2008 and 15% in 2009. In 2010, SBA 7A loans in the Arkansas Delta jumped to $71.5 million.
But with 3 months to go in the federal government’s fiscal year, statistics compiled as of April 30, 2011 showed lending in this crucial program in Arkansas’ Delta sitting at just $28.6 million, nearly 60% below 2007 levels.
"Small businesses in Arkansas still lag far behind pre-recession figures," an SBA study of the Delta reported.
The report also noted that there were more than 51,000 small business employers in Arkansas, accounting for nearly half of all private sector jobs.
Masingill said that report was one of the major factors in pushing for something new to jump-start lending.
"Small businesses are the backbone of the Delta economy. And yet too many of our mom and pops simply don’t have the resources they need to do what they do best – grow the economy and create jobs. This agreement will help up us close that gap in resources and give our economy a shot in the arm at the same time," he said.
WHAT IT DOES
The four-page agreement between DRA and SBA doesn’t require any new money or fiscal commitments between the two agencies, but it does call for increased collaboration.
The memorandum signed outlines 6 primary areas of coordination between the two agencies:
1. Educate DRA and SBA staff on one another’s programs and initiatives, including distribution of each group’s materials and training schedules through the other agency’s field network.
2. Connect SBA and DRA resources in the Delta, especially a number of programs aimed at veteran and women-owned businesses.
3. Joint Outreach Activities, whereby the two agencies will work jointly on workshops and educational events with an emphasis on access to affordable capital and financial literacy.
4. Link to one another’s web sites
5. Coordinate lender recruitment activities. The two agencies want to work in a more unified fashion to identify and recruit local and national financial institutions to participate in programs benefitting small businesses.
6. Leverage DRA and SBA resource partners for economic development.
"Creating good-paying jobs is our number one priority," Masingill said, noting that his group and economic leaders in the Delta won’t ignore larger projects. "That means all options – from investing in large industrial projects to growing our entrepreneurial community – must be on the table. Leaders across the Delta understand that and today’s deal shows we have the innovative ideas to provide affordable access to capital, create an ecosystem for entrepreneurs and create jobs."
While the DRA-SBA deal experiments with its mission to encourage entrepreneurship, other groups are making new efforts too.
Connect Arkansas, a project overseen by Little Rock-based Arkansas Capital Corp., launched a new effort this summer bring entrepreneurial education to different parts of the state including a heavy Delta emphasis.
Connect Arkansas’ mission aims to expand broadband access to rural Arkansas – a crucial component for small business to flourish. Connect Arkansas leaders are taking the concept further by trying to illustrate to local communities how utilizing broadband can lead to a sustainable career in a town or city that has seen its population slide by 25% over the past decade.
"The Internet makes geography irrelevant," said Sam Walls, president of Arkansas Capital Corp. and Connect Arkansas. "Through increased recognition of the importance and capability of what the Internet can do for people, demand will increase and be followed by improved capability. There is a general recognition that most job creation occurs because of entrepreneurial activity rather than the establishment of large enterprises, which are usually associated with manufacturing, and this is particularly true in the Delta."
Connect Arkansas is developing an Internet-based system to make entrepreneurial support services available to citizens anywhere in the state. It encompasses teaching material made available by
In the coming months, Walls says that trainers will take the program to schools and communities across the state – including the Delta – in an effort to reach high school students or displaced adults who don’t see a promising career path in the existing workforce.
"These students are the workers of tomorrow and, quite frankly, there are fewer and fewer jobs in these shrinking communities. For a laid-off worker, a new job may not exist in a small town. To remain where they are and make a living, these folks are likely going to have to create their own job. And broadband can make that happen."