How one local credit union is helping Black business owners obtain capital
Partygoers having fun with Pink Sky Productions’ photo booth
There are a number of reasons to bank locally.
From lower fees to personalized attention, faster decisions and support to local communities, individuals and small business owners stand to benefit when they choose to do business with a local bank rather than a large, corporate brand.
Jessica Baker, owner of Vibe Spot and Pink Sky Productions
It is with those benefits, and more, in mind that Local First Arizona encourages individuals and businesses to “move your money” during National Community Banking Month in April.
Not only do local banks offer greater access to capital through relationship-based banking practices, but that access then positively impacts the economic health and resiliency of communities.
If you own a business, you should know your banker
For Jessica Baker, owner of events venue Vibe Spot and photo booth rental company Pink Sky Productions, the relationship element struck a chord.
While enrolled in Local First’s We Rise Business Accelerator, designed specifically for Black business owners, Baker heeded the advice to establish a relationship with a banker.
Mohammed Ahmad of Arizona Financial Credit Union
Mohammed Ahmad, assistant vice president of business banking for Arizona Financial Credit Union, volunteers as a We Rise instructor. Baker quickly connected with him.
“We met and had an opportunity to have one-on-one conversations, and we talked about my options and my business,” Baker said. “A big piece is building that close relationship, which is so different from having a banker look at stats on a piece of paper to make a decision.”
When it came time for Baker to grow her photo-booth business by purchasing a van, she knew Ahmad would understand the need, understand her capabilities as a business owner and appreciate the value that the loan would offer.
She got the loan, and then went back for another loan to support her growth from one business to three.
“I’m just grateful for the introduction and the partnership. This was my first time banking local. I hadn’t considered it until the We Rise accelerator,” Baker said. “The level of service I get is hands-down night and day. It’s a wildly different experience banking local and being able to build relationships. Even if you build a relationship with a larger bank, you’re still a small fish in a really big pond.”
Black business owners can increase access to capital with a local bank
Statistics support Baker’s experience.
A 2022 survey by payroll provider Gusto found that only 6% of Black new business owners receive business loans they seek.
When compared to the 36% loan approval rate of Black new business owners who graduate from We Rise, the upside to local banking is pretty clear.
One of Arizona Financial Credit Union’s locations
Those benefits extend to any new business owner in need of capital.
Biz2Credit cites data that shows small banks and credit unions approve about 1 in 5 business loans, while big banks only issue loan approvals for about 1 in 8 applications.
For Ahmad, the value of the relationships he builds with business owners is anchored in his self-imposed responsibility to educate others about the banking system, the options that exist and the right ways to utilize debt for growth.
He counsels new business owners to make sure they understand that their revenue needs to exceed what they borrow, that they are just as valuable to a bank as a bank is to them, and that their contributions are valuable to the communities they serve.
“You’re a consumer at the same time as a business owner. Your access to funds and how you treat your funds and how much you’re being charged for your funds are all strong things to consider to help your business grow,” Ahmad said. “As local financial institutions, we have a responsibility to show you’re valuable, you have strong ideas and the value you bring is a drain if we don’t create opportunities to invest in you.”
The Pink Sky Productions photo booth is popular at events
Knowledge, according to Ahmad, is power when it comes to banking.
But for many that knowledge is lacking, which is why he appreciates the education that is provided to Black business owners who participate in We Rise. A lack of knowledge, he said, creates opportunities for vulnerability. And those moments may lead to catastrophic financial decisions.
As a local banker, his job is more than transactional. It’s personal.
“I think the perception is that smaller institutions have less capabilities, when it’s quite the opposite. Bigger institutions will always beat us in the sense of flashiness and advertising and how things look,” Ahmad said. “But when you submit an application to a larger institution, how often can you say it’s touched by a human being? At local banks, there are people rooting for their community and wanting them to succeed.”
The Vibe Spot ready for a celebration
When Baker reflects on her entrepreneurial journey, she can safely say she’s grown in part because of her ability to responsibly use debt as a tool. She did that with Ahmad’s help.
She hopes other Black business owners can find trusted financial resources that will not only help with growth but also help dispel a cultural mistrust of utilizing debt.
“There are people leveraging and growing businesses on other people’s dimes and that’s the way to do it,” she said.
Are you a Black business owner? Learn more about the free We Rise Business Accelerator at localfirstaz.com/we-rise.
Hire Pink Sky Productions and Vibe Spot at azpinksky.com and vibespotaz.com for your next party or event.
Want to open an account with a local credit union or bank? Find a location near you, including Arizona Financial Credit Union, at localfirstaz.com/move-your-money.
