Facing Racism: Barriers to business for minority entrepreneurs

LA CROSSE, Wis. (WKBT)–In response to local protests, La Crosse Mayor Tim Kabat said systemic racism needs to be addressed in all parts of the community. That includes supporting and growing local businesses and jobs especially for people of color.

The number of minority-owned businesses is disproportionate to the population, according to the latest data from the Census Bureau. While minorities make up roughly 10% of the city’s population, they own about 4.6% of businesses. In the city, there are 1,411 total employer firms, meaning there is at least one location with paid employees besides the owner or partners. Just 65 are minority-owned, specifically someone that is not white.

For Key-Key Banks, it started as a dream when she was just 14 years old– to one day own her own business. The opportunity presented itself plenty of times, just never the right time.

“Didn’t have enough money either,” said Banks.

While her dream had to wait, Banks went to work as the assistant manager at Sports Clips.

“But I always had people coming and asking, ‘oh could you do braids in my hair? Could you do a sew-in?’ So I would get off of work and have to still do hair,” Banks said.

It was too much.

“It was like– oh my goodness, I need to find some way to put all of this in one,” Banks said.

Little by little, Banks and her fiancé saved up enough to start a business.

“Everything we got in here, we did it one by one,” Banks said.

‘Ruth Styles’ opened in January, making Banks the first person in the family to open a business. The salon/barbershop is named after her grandma that always told her to stay in school and loved to do her grandchildren’s hair.

“Figured we spend some money, make some money, then spend it again,” Banks said.

She opened the shop with no loans.

“I try to stay away from that. Because I just finished paying my student loans,” Banks said.

She’s far from alone. It’s one of the barriers that people, especially minorities, might face when becoming an entrepreneur.

“These smaller businesses, these start-up businesses that you see that are often minority-owned are either what’s called unbanked or underbanked,” said Missy Hughes, secretary and CEO of the Wisconsin Economic Development Corporation. “So if you don’t have a line of credit, you can’t buy inventory.”

Whereas other business owners might go to a banker for a line of credit or a loan, others only have whatever is in their pocket. According to the Ewing Marion Kauffman Foundation, nearly 15% of black entrepreneurs and 12% of Hispanic entrepreneurs report using a personal credit card, compared to a little more than 9% for white and Asian-American entrepreneurs, to fund a new business or acquire an existing business.

“So thinking about how do we help these businesses gain access to capital is really critical,” Hughes said.

For Banks, she wishes there was more funding available.

‘You wouldn’t believe how many people there are like me that would like to be on their own,” Banks said.

Especially to meet the needs of the area. While Banks will cut, braid and style anyone’s hair, she’s able to provide services that other salons don’t.

“We need more shops like that up here to break out into culture– because that’s what it is,” Banks said.

“I think as the city continues to diversify, we want to make sure people are empowered to invest in the city,” said Jason Gilman, director of the planning and development department for La Crosse.

Gilman also serves as the secretary for the Human Rights Commission. He said the group hears about these issues and can talk with business owners about solutions.

“If they aren’t afforded a certain amount of financing, the city could come in with low-interest loans and fill that gap,” Gilman said.

The city has also offered options like the Minority-Owned Business Assistance Grant to support small businesses and startups.

“These are really important for the city’s economy and they’ll be even more important when the city’s demographics continue to diversify,” Gilman said.

Funding is only part of the issue. People have to know about it.

Luckily for Banks, she’s found a good network that’s helped her expand her business. One thing that has definitely helped is being a member of Southside Moms United.

“They’ve been very involved in a lot of the minority shops around here,” Banks said.

It’s these kinds of connections that the WEDC is looking for. Right now, it works with partners like the Hispanic Chamber of Commerce or the Hmong Chamber of Commerce.

“They already have knowledge about the obstacles and the challenges and so they can be a great resource for minority-owned businesses,” Hughes said,

They recently took this approach with the Ethnic Minority Emergency Grant Program. By working with other organizations, they will be able to give out about 850 of these loans across the state, according to Hughes.

“So I think we have work to do to continue to continue to find these small businesses to reach out and contact them and help them get the resources that are out there,” Hughes said.

Some of the solutions may be difficult. The city is facing a steep budget shortfall. But regulatory changes, like more mixed-use overlay zones and Tax Incremental Finance Districts, could spur development. Essentially ways to reduce the red tape for businesses and in the long haul generate more money for the city.

“That’s an area that I think we’re constantly looking at too to make sure the right type of capital is plugged into the right needs in the city,” Gilman said.

It seems like ‘Ruth Style’s was the perfect fit on the corner of Jackson and 16th Streets. There are days where they’re completely booked. Despite the pressure that Banks feels of being the first person in her family to be an entrepreneur, it’s been worth the risk.

“I just love to see them happy and looking better and making people feel great,” Banks said.

The cost of doing business has paid off.

This story is part of an ongoing News 8 Now Investigates series looking at racial justice and issues in our community. For more, click here.