Southern Bancorp is expanding on a number of fronts. The Arkadelphia-based Community Development Financial Institution (CDFI) is about to receive a major equity investment from a new federal fund, has launched a minority business initiative with Arkansas banks, will open a banking center in Little Rock, and will expand its reach with a recent new hire.
CEO Darrin Williams was a guest on this week’s Talk Business & Politics to discuss the changes.
For starters, Southern Bancorp learned this week it is eligible for $237.5 million in equity investment from an $8.7 billion U.S. Treasury effort called the Emergency Capital Investment Program (ECIP). The program was created to help businesses hurt by COVID-19. Williams calls the investment “a transformational game-changer” and said it will allow Southern to put more money into small and minority-owned businesses in the underserved communities in which it operates.
“It’s really designed to help communities that have been disproportionately impacted by COVID-19 recover to get back and actually build back even better,” he said. “We intend to expand our footprint. We intend to go deeper in communities, those that are traditionally not served well by traditional financial institutions. So we want to make loans to small and minority-owned businesses to low and moderate income consumers, and particularly rural areas that we serve.”
Southern, which has locations throughout the Delta, is planning to open a banking center in Little Rock’s 12th Street corridor in the near future, a move that is part of the revitalization effort of this core part of the capital city. In addition to the ECIP investment, Williams was already working with central Arkansas banks on a new initiative called the Minority Business Development Fund.
This fund is an effort to pool resources from traditional banks to create a loan fund, overseen by Southern Bancorp, to assist entrepreneurs who can’t meet strict guidelines by which highly-regulated banks must abide. The fund is an outgrowth of conversations from the Black Lives Matters protests in the wake of the George Floyd killing in the summer of 2020.
Banks such as Simmons Bank and the nonprofit Winthrop Rockefeller Foundation have partnered with Southern to raise money for the fund. Williams said the loans it makes to businesses, especially those in the inner city and run by people of color, will be “high touch,” meaning there will be additional support given to borrowers such as access to accounting, legal and marketing services to help them grow.
Williams said the influential Little Rock business group, 50 for the Future, is supportive of the effort.
“Some members at 50 for the Future met with members of the Black Lives Matter movement and said, ‘What can we do to advance racial equity in the city?’ And one of the things that was suggested and asked for was access to capital. Of course, it’s that capital that allows a business to grow. And we know minority borrowers typically don’t have access to capital like traditional borrowers,” Williams said.
Because Southern has more flexibility to administer loans, the Minority Business Development Fund can work with small businesses and offer things like interest-only payments for a period of time or loans based on revenue expansion. The loans could range from $50,000 to $250,000.
“It gives that business owner some time to grow and expand that business and to increase that revenue. And we know that if these businesses succeed, they will hire more people that will obviously help those communities,” Williams said. “This is a pilot… We were planning to have about 50 businesses in this pilot. Right now, we have 63 that signed up. So we’re trying to figure out how we can expand those pilots.”
Williams also discussed the hiring of Anthony Young to lead Southern Bancorp Community Partners, a non-profit arm of Southern Bancorp. Young, who hails from Memphis via Mississippi, brings a plethora of entrepreneurial, investment and banking experience to the table.
Watch Williams’ full interview in the video below.