Change Makers Interview: Lenwood V. Long Sr. of the Carolina Small Business Development Fund

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Today we’re excited to share our interview of Lenwood V. Long Sr. He is the CEO and President of Carolina Small Business Development Fund (CSBDF), a Community Development Financial Institution (CDFI) and statewide nonprofit organization based in North Carolina. The mission of Carolina Small Business is to foster economic development in underserved communities by providing capital, business services, and policy research to support small businesses.

Lenwood was gracious enough to share his vision for community finance and some of the challenges he sees that still must be addressed. Lenwood is an industry Change Maker who has dedicated his career to community finance and increasing financial inclusion. This interview is will give you insight into what truly motivates all the people like Lenwood, who work at CDFIs across the country and are building a more inclusive and fair economy one community investment at a time.

Well, I grew up in rural North Carolina, a little place called Bayboro, North Carolina. Proud to be a product of that rural America, and I grew up in time of segregation. I grew up at a time where I never thought a guy from Bayboro, North Carolina, would not only be a CEO of a community development financial institution. But really never imagined that I’d be in a position to help people fulfill their dreams, realize their aspirations, and be an advocate for change. And this whole movement towards decreasing the wealth gap that we see in this nation among people of color. And I’m excited to be on this mission.

Lenwood V. Long, Sr. (CSBDF)

In his role as President/CEO of CSBDF, Lenwood has led the organization through a period of transformational growth. In 2009, under his leadership, the organization went through a strategic shift and rebranding, establishing its direct small business lending program. Within five years, loan volume totaled over $30 million.

Lenwood has more than twenty-five years of experience in community economic development, human resources, and business management. He has held leadership positions in a variety of organizations, including statewide economic and community development agencies, national consulting firms, and nonprofit organizations.

Lenwood’s professional accomplishments are rivaled by his personal achievements, having served in the United States Army (Viet-Nam Combat Infantry Paratrooper) and received an Honorable Discharge as Sergeant (E-5). Lenwood has also has served as a bi-vocational Senior Pastor of New Bethel Baptist Church in Rolesville, North Carolina since 1996. In 2016, Lenwood was awarded The Order of the Long Leaf Pine. This is among the most prestigious honors awarded to North Carolinians who have made a significant impact through their exemplary service to the state and to their communities.

CNote and CSBDF recently announced a partnership where CNote will serve as a capital source for CSBDF’ as they continue to provide loans to underserved small businesses across North Carolina. The entire CNote team is extremely excited to partner with Lenwood and the Carolina Small Business Development Fund team. Now, on to the interview.

If you’d like to listen to the full audio of the interview, click play below. Additionally, you can skim the interview highlights below or the read entire transcript below the highlights.

 

Interview Highlights

About Carolina Small Business Development Fund:

Carolina Small Business Development Fund is a small business lender. Our mission statement is to provide capital business services and policy and research to support small businesses. So the focus is really upon small businesses throughout the state of North Carolina, although we do provide some lending in South Carolina. So the main focus, small business, augmented by business services with policy and research as a focal point to become a current leader as relates to small businesses, especially in North Carolina.

And the communities that CSBDF serves:

A way to look at it is we are a very diverse lender. If you look at our lending across the state of North Carolina, you’ll find that roughly 57% minorities, or people of color. I’m very pleased that over 38% of our lending is to women entrepreneurs, gratified that 18.5% of our lending goes to veterans across this state, as well as about 41% to startups. And let me sort of say that the reason startups are so high is that we are an SBA approved community advantaged lender, which is a pilot program developed by SBA to allow CDFIs to participate in the R7A program. But they renamed it because of the focus to underserved community advantage. And then about 34% are to low income. So as you can see, the lending is very diverse and has reached that underserved market that typically banks, while strong supporters, do not serve because of [1] the risk level of some of our borrowers, [2] credit issues, and [3] size of loans. Those tend to not be accessible for underserved communities and people of color.

On defining what CDFIs do, they “focus on providing capital or housing support services to underserved communities, and primarily those communities that have a high percentage of poverty, especially persistent poverty. And so the mandate coming from the CDFI fund itself is really serving the truly underserved across this nation. And we’re proud to be a part of our mission and vision, and the vision bringing greater economic opportunity for our people.”

How Carolina  Small Business works to measure the impact of its community lending activities:

We do an impact assessment analysis of our lending through our borrower survey. We even partnered with the Center for Budget and Tax here in the State of North Carolina, in the City of Raleigh, and developed a sort of matrix, a form of looking at indirect impact. We’d say that when you look at multiplying impact, it’s says that for every loan we make there’s an indirect impact in that community. And I think that’s somewhat abstract, but when you begin to look at it from a simpler model that we developed, it’s simply this; as we make loans, those borrowers hire people, so we add to the employment of those communities. Two, that the borrowers, they pay taxes so you’re adding to the revenue base of those communities. And third, those borrowers are people who buy services and goods, which helps the economic ecosystem of that community, and so as we make loans not only are we helping the borrower to move forward, we are actually helping to build the economy of local communities.

On how being so close to the community helps Carolina Small Business better evaluate risk:

I think that’s very important. You’ve raised an important point because one of the things we like to do is get to know our borrowers and our borrowers get to know us. And so it’s not that we can scale and trying to scale the loans approved or the number of borrowers. But our mission is to see those borrowers succeed. And so we want to work with them, exactly where they are and that rating would tell us based upon a number of metrics that we’ve developed to do that. How much and what level of technical system that borrowers need? Because, let’s face it, when you serve in underserved markets, sometimes they may have great business plans, they make cash flow but there may be some management issues they have to deal with. Because you can be good at your industry but perhaps not good at managing, perhaps not good at fiscal management. And so in order to see you succeed, we can assess that. And from that assessment we’ll say that, “Okay, this borrower needs some assistance.” and market that. “This borrow needs some assistance with financial management.” I may be management. And so we can tell a program for that borrower. And I do think larger financial institutions and banks have a sense but they don’t have the time. Their business model is to provide that technical assistance to those borrowers in that category. Banks give you a loan, you’re on your own.

Talking about addressing the core issues of why African-American business owners are underfunded:

For example, one of the things that I looked at, was that I was lending, I saw the denial rate for African-Americans being higher than the other groups we were serving. And I asked the question, “Why is denial so high?” We found out there were four reasons. One was credit, the second was equity, lack of equity, the third was collateral. Equity and collateral sort of go together because it speaks to… And as broad as this societal gap in wealth, if you don’t have any wealth, if you don’t have any capital, you can’t afford to invest any property, invest in loans. The other thing was the business management. So we designed a program to meet those four areas.

On some special initiatives Carolina Small Business is working on related to veterans and historically black colleges:

One is this whole initiative around small business for veterans. We have a special program, and we’re piloting with two other CDFIs, people out of Texas and Main Street Launch out of California, design a national program for veterans around best practices. How do you effectively lend to veterans, and what metrics are you using to measure impact and success, so we’re proud of that. And we also talked to Bank of America about a program that’s in the design stage. The other piece is that I’ve had this strong interest in women entrepreneurship, and so not only do we operate a women business center, but we have a partnership with historically black college and universities to try to use university resources to extend outside of the walls, into local community trying to build a capacity, and we develop a women entrepreneurship center with a predominately black university and the state African-American university and the state.

The Full Text of CNote’s Interview with Lenwood

00:02 CNOTE: Lenwood, I want to thank you for taking the time to talk with us today. We’re extremely excited to have Carolina Small Business as a CNote partner.

00:13 Lenwood: Oh, delighted.

00:15 CNOTE: Excellent. And I was hoping for people that may not understand or know much about Carolina Small Business, can you tell us about it and its core mission?

00:26 Lenwood: Sure. Carolina Small Business Development Fund is a small business lender. Our mission statement is to provide capital business services and policy and research to support small businesses. So the focus is really upon small businesses throughout the state of North Carolina, although we do provide some lending in South Carolina. So the main focus, small business, augmented by business services with policy and research as a focal point to become a current leader as relates to small businesses, especially in North Carolina.

01:19 CNOTE: How long has Carolina Small Business Development Fund been around?

01:26 Lenwood: Great question. Actually, Carolina Small Business Development Fund started in 18… I mean, [chuckle] 18. 1989, as the North Carolina Minority Support Center, with a focus for providing capital, tactical assistance to a community development credit union. And then we rebranded in 2008 as the Support Center, with a primary mission towards small business lending. Later rebranded in 2016 to Carolina Small Business Development Fund. And the reason for the second rebranding was that we felt the Support Center… People were getting it confused. They thought we were a support agency, and so we think the alignment with the new name, logo… Nothing changed in the mission, on the vision. Just an alignment with the name with the mission.

02:39 CNOTE: Can you tell us a little bit about the communities you serve, and kind of your focus or goals?

02:50 Lenwood: Sure. Sure. A way to look at it is we are a very diverse lender. If you look at our lending across the state of North Carolina, you’ll find that roughly 57% minorities, or people of color. I’m very pleased that over 38% of our lending is to women entrepreneurs, gratified that 18.5% of our lending goes to veterans across this state, as well as about 41% to startups. And let me sort of say that the reason startups are so high is that we are an SBA approved community advantaged lender, which is a pilot program developed by SBA to allow CDFIs to participate in the R7A program. But they renamed it because of the focus to underserved community advantage. And then about 34% are to low income. So as you can see, the lending is very diverse and has reached that underserved market that typically banks, while strong supporters, do not serve because of [1] the risk level of some of our borrowers, [2] credit issues, and [3] size of loans. Those tend to not be accessible for underserved communities and people of color.

04:46 CNOTE: You said a magic word in that response, which was CDFI. And you know, I think a lot of people hear that acronym…

04:58 Lenwood: Right.

05:00 CNOTE: And they don’t really know what it means.

05:00 Lenwood: I know, I know.

05:01 CNOTE: And since you’re an expert, can you give us your one or two sentence explanation of what a CDFI is?

05:07 Lenwood: Yes. Yeah, yeah. Well, you know, one of the things that many people… And I think across the nation, they hear this word CDFI and they wonder, “Well, what is that?” Well, actually an acronym, Community Development Financial Institution, that is certified rather by the Department of Treasury to focus upon providing capital or housing support services to underserved communities, and primarily those communities that have high percentage of poverty, especially persistent poverty. And so the mandate coming from the CDFI fund itself is really serving the truly underserved across this nation. And we’re proud to be a part of our mission and vision, and the vision being greater economic opportunity for our people, it sort of captures the served and the underserved.

06:18 CNOTE: Excellent, yeah.

06:20 Lenwood: Sure.

06:21 CNOTE: So, you talked a little bit about the community you serve, and I was just wondering, when you make these loans do you see kind of secondary effects on the community? And how does that play out?

06:43 Lenwood: Yes. We do a sort of impact assessment analysis of our lending through our borrower survey. We even partnered with the Center for Budget and Tax here in the State of North Carolina, in the City of Raleigh, and developed a sort of matrix, a form of looking at indirect impact. We’d say that when you look at multiplying impact, it’s says that for every loan we make there’s a indirect impact in that community. And I think that’s somewhat abstract, but when you begin to look at it from a simpler model that we developed, it’s simply this; as we make loans, those borrowers hire people, so we add to the employment of those communities. Two, that the borrowers, they pay taxes so you’re adding to the revenue base of those communities. And third, those borrowers are people who buy services and goods, which helps the economic ecosystem of that community, and so as we make loans not only are we helping the borrower to move forward, we are actually helping to build the economy of local communities. Because in the aggregate across this nation, over 85% are small businesses, so what drives this economy and we cannot forget are really small businesses across this nation. And I think sometimes we forget that, and when you talk about small businesses nationally they always talk about regulatory reform being the answer, but no, it’s access to capital that’s being the number one issue. And two, when you look at, when you make a loan it’s more than just a loan to a borrower. Think about all those impacts that I referenced in terms of tax, in terms of savings, in terms of spending, and it all leads to what we say a healthy and resilient community. And so that’s the way we sort of spin it.

09:06 CNOTE: Gotcha. No, excellent points you make there. So one thing I was wondering is, the common conception a lot of people have is, when a small business gets a loan from a bank or something, they get a check and then they get a pat on the back and they say “Good luck” and that’s about it. [chuckle] But my understanding is that a lot of these community lenders like Carolina Small Business Development Fund, they also do other things to assure that the small business or entrepreneur succeeds. Can you talk a little bit about how you work with the people that you serve?

09:44 Lenwood: Sure, sure. One of the things that… We have this premises, that we make a loan, we want to see that borrower’s success story. As a part of that we develop a, sort of a risk rating of every loan we make, and with that risk rating we will establish whether or not this is a borrower that we need to be supportive through our business services, technical assistance support, and so with that we are able to sort of follow our borrower from the time that borrower receives a loan, and to check on that borrower to make sure that they are meeting not only their target goals, but also they’re not experiencing any problem with markets and cash flow, because at the end, we certainly want to see the borrower pay us back, but more importantly we want to see that borrower succeed. Because when you think about it, when that borrower succeeds, look at the economic benefit it plays to that local community. And so it’s more than just giving a borrower a loan, it is really being that partner and trusted business guide with that borrower.

11:08 CNOTE: Excellent. So kind of a shared success model where if they do well and then…

11:13 Lenwood: Yeah, right, right, right. So the borrower does well and you look at the model providing capital to small businesses throughout the state, as those borrowers succeed and pays back, that money is recycled for lending to other borrowers. And so it’s a revolving loan fund, and when revolving say that it turns around, and that’s important for us because we want to see you not only succeed, but help other borrowers in paying back the loan that you received from us.

11:56 CNOTE: Excellent. So you used a word that stood out to me. You used the word risk in your answer before, and I wanted to ask you a little bit about riskiness of loans. And do you think that as someone, as a community lender, as someone who’s really close to the community and the people you serve, does that give you an advantage over big banks as far as understanding the riskiness of your borrowers and the loans that you may issue.

12:26 Lenwood: I do. I think that’s very important. You’ve raised an important point because one of the things we like to do is get to know our borrowers and our borrowers get to know us. And so it’s not that we can scale and trying to scale the loans approved or the number of borrowers. But our mission is to see those borrowers succeed. And so we wanna work with them, exactly where they are and that rating would tell us based upon a number of metrics that we’ve developed to do that. How much and what level of technical system that borrowers need? Because, let’s face it, when you serve in underserved markets, sometimes they may have great business plans, they make cash flow but there may be some management issues they have to deal with. Because you can be good at your industry but perhaps not good at managing, perhaps not good at fiscal management. And so in order to see you succeed, we can assess that. And from that assessment we’ll say that, “Okay, this borrower needs some assistance.” and market that. “This borrowers needs some assistance with financial management.” I may be management. And so we can tell a program for that borrower. And I do think larger financial institutions and banks have sense but they don’t have the time. Their business model is to provide that technical assistance to those borrowers in that category. Banks give you a loan, you’re on your own.

[chuckle]

14:21 CNOTE: Yeah, and that can be challenging.

14:26 Lenwood: It can be, but look at… I wanted to draw this parallel. Look at who banks lend to, small business-wise. They are probably a more seasoned business, more likely not to be a startup, more likely to have been in business, more likely to have demonstrated the capacity to repay, more likely to have demonstrated the capacity to manage and perhaps more likely not have credit challenges. Look at the borrowers that community financial institutions, or CDFIs, typically lend to. Those borrowers are typically underserved, they did not meet the metric requirements of banks, and more often than not, perhaps do not have as much management experience. So they need some independent, undergirding to help them to be successful in the work they do.

15:34 CNOTE: Gotcha, and then that’s where lenders like Carolina Small Business Development Fund and other CDFIs try to come in and, not only help provide capital.

15:45 Lenwood: But also the business services or technical system, which is vital to the success of those small businesses.

15:54 CNOTE: So a little bit earlier, you were talking about this imbalance in capital flows to underserved communities. And at the end of last year, December of 2017, there was a study that the New York Federal Reserve did that something like only 20% of small businesses with employees are owned by women. And then there’s obviously a lot of other statistics related to minority business ownership. In your mind, what are some of the big things we can do as a society to work out these imbalances?

16:32 Lenwood: Great questions. I wanna draw your attention to a commission study that Wells Fargo did. And they did it looking at access to capital, and they found out and they didn’t have to hire researchers. The research firm that did this study, that people of color, primarily African-Americans, Hispanic, Latino, women, and veterans tend to have difficulty accessing capital. Take a rocket scientist to figure that one out, right?

[chuckle]

17:14 Lenwood: And so they developed a program around addressing those disparities. And I think that while they were very effective in doing that, they missed it in some categories. Mainly in that CDFIs, particularly those that are managed by people of color, tend to suffer from some of the same problems and issues that the borrowers they have, that’s around access to capital. And so when you look at those groups, African-Americans, Latino, Hispanic, and women entrepreneurs, and veterans, they do tend to have challenges as relates to accessing capital.

18:05 Lenwood: I think if you would slice each of them out, that they would face different challenges. For example, one of the things that I looked at, was that I was lending, I saw the denial rate for African-Americans being higher than the other groups we were serving. And I asked the question, “Why is denial so high?” We found out there were four reasons. One was credit, the second was equity, lack of equity, the third was collateral. Equity and collateral sort of go together because it speaks to… And as broad as this societal gap in wealth, if you don’t have any wealth, if you don’t have any capital, you can’t afford to invest any property, invest in loans. The other thing was the business management. So we designed a program to meet those four areas. But, in terms of what the larger society can do, and pay attention to trying to… We sort of gloss over these indices, and we do not meet them head on with this whole issue of capital, specifically targeted for the groups that have difficulty accessing capital. We dance all the way around it, but we never directly face it. And until we directly face this issue, we will always be talking about this disparity, between accessing capital for these groups that have that difficulty.

20:03 CNOTE: Absolutely, that’s a great point. And so obviously people like yourself, and funds like Carolina Small Business, certainly play a big role in that. But I wonder if some people don’t fully understand, or maybe don’t appreciate the work you do. I was wondering if you face or notice any common misconceptions about community lending, and is there anything you’d like to clear up, or just clear the record of?

20:37 Lenwood: Yeah, I think you raise important issues. There is a misunderstanding. I think the misunderstanding comes from misinformation, and time to understand these challenges that CDFIs face across this nation. We look at them as being another vehicle to just provide capital for the housing, lending, some other areas, as a support organization. Not as an organization that’s really helping the economy, as well as people within underserved communities. And so, instead of valuing that contribution to the larger economic impact, we tend to devalue the work. And it’s manifested in public policy, where you have public policy around allocation of resources that literally does not put money in for CDFIs, and a proportion needed to address some of the great problems facing underserved communities.

22:00 Lenwood: We put money in infrastructure, we put more money in symphonies than we do in CDFIs, serving the economies and people, these various communities. And so if you look at nationally, for example, and the CDFI fund itself, where the administration is trying to cut funds out. And when you cut funds out to allow agencies that’s been working for years trying to address inequality, then you’re making a statement that you’re devaluing the work of these CDFIs. I think one, there’s not enough time to understand the work we’re doing, the contribution, and building a strong ecosystem within local communities. And thirdly, more importantly, we tend to devalue the work they do, and not value the contribution in building access to capital, building strong communities, whether it’s in housing or job creation. That’s my platform. You hit a nerve for me.

[laughter]

23:19 CNOTE: Well yeah, you’ve got it down. You’ve certainly convinced me. And I think one thing that maybe some of our policy makers maybe overlook is that my understanding, and maybe you can speak to this a little bit more eloquently than I can, but I think the return on investment is extremely high for these programs. So if you’re at building a freeway, or maybe the RIO is higher for some these CDFI support projects, right?

23:47 Lenwood: Yeah. Well, how do you measure that? And I don’t think people ever think about the measurement of return on investment. When you look at a number of housing projects in underserved communities, that that would not have been there unless that CDFI had put it there. Or the borrower whose life has been made much more fuller by resource of capital to start a business. And then you look on the return investment about the money you put in and the benefit that goes in those local communities. And I don’t think we really have accurately captured the total return on investments within local communities, or the return on investments that CDFIs yields to the greater economy across this nation and the various communities they serve in various state. It’s just huge. When you look at some CDFIs that are in new market tax credit, that are scaling businesses. If you look at CDFIs that are doing housing projects, that are creating new housing alternatives for low income neighborhoods. Look at CDFIs that are providing lending like Carolina small business. Some [small business owners] who had dreams and are able to fulfill their dreams, that’s why we call ourselves ‘being dream catchers’ because, we think, that one of the things we do is help people realize their dreams. So, you brought up an interesting point, that is the return on investment, very important, underestimated, not accurately captured.

25:46 CNOTE: Yeah. So, my interview with you today is part of our Change Maker Series. So, I can’t let you off the hook, I wanna ask you some questions about yourself.

26:00 Lenwood: Sure.

26:01 CNOTE: And for those listening, just to remind everyone, we’re talking to Lenwood V. Long, the CEO of the Carolina Small Business Development Fund. But I wanted to ask you a little background, where did you grow up, and did you ever think that you’d be doing what you’re doing today?

26:20 Lenwood: Well, I grew up in rural North Carolina, a little place called Bayboro, North Carolina. Proud to be a product of that rural America, and I grew up in time of segregation. I grew up at a time where I never thought a guy from Bayboro, North Carolina, would not only be a CEO of a community development financial institution. But really never imagined that I’d be in a position to help people fulfill their dreams, realize their aspirations, and be an advocate for change. And this whole movement towards decreasing the wealth gap that we see in this nation among people of color. And I’m excited to be on this mission. And I must confess, another part of me is ministry, that I’m an ordained minister and a pastor at church, so I’m not ashamed of that. And so that’s another area that I never thought I would be in but I believe in this saying of “Divine destiny”, and so I think both of ’em goes hand in hand. This mission work, I call this mission work, of helping the underserved as well as spiritually nurturing people as well.

27:56 CNOTE: Oh, that’s excellent, really inspiring. Obviously, you’re doing fantastic work, it looks like kind of with everything you touch. My understanding is that Carolina Small Business Development Fund is done extremely well under your leadership, and I was just wondering if there were any specific accomplishments that you were most proud of personally.

28:23 Lenwood: Well, again, yeah, I’m really proud of the team that I’ve been blessed to help me carry out this mission of serving the underserved, through the organization that we’ve been blessed to lead. And the accomplishment for me is this team spirit that we have. And I don’t take credit for anything. Everything I’ve been able to accomplish is through a great team that I’ve been blessed to have. So I guess I would frame the accomplishment around this team that we’ve assembled to make this impact in local communities across the state.

29:19 CNOTE: That’s a great way to look at it. You know, it takes a big group of people to do big things, and it sounds like you guys are doing that there.

29:28 Lenwood: Yeah, it does. It does. It does. It really does. And other thing is, I’ll always, I’m proud of being a Vietnam veteran, that I can also inspire other veterans to go for it. Try to follow your dream, follow your passion, be risk takers, make things happen. So, never allow whatever you are scared of be your destiny. Try it, move it. You feel it, move on it.

30:05 CNOTE: Excellent. Yeah, well that’s great advice. Actually, that makes me want to ask you another question I like to ask people. If you could go back in time and give twenty-year-old Lenwood some advice, [chuckle] what would that look like?

30:24 Lenwood: Oh, man. It would be, “Lenwood, grow up.”

[chuckle]

30:32 Lenwood: Yeah. You know what, I would tell him, “Follow your passion around where you would like to go.” Because one of the things you understand, Lenwood at 20 years old was fighting a war and had no idea why he was fighting that war, and I learned this out of survival in a war setting. And that taught me life lessons in many ways. Left some scars, sure, but it taught me some things, too, that I will forever cherish about life.

31:12 CNOTE: Wow. Yeah. I was gonna ask you, you talked about being a veteran and if I recall correctly, I think you guys may be doing some special initiatives, or is there anything…

31:26 Lenwood: We are, we are.

31:28 CNOTE: Yeah, so what are those initiatives that Carolina Small Business Development Fund’s working on right now?

31:34 Lenwood: Well, we have a… There’s two. One is this whole initiative around small business for veterans. We have a special program, and we’re piloting with two other CDFIs, people out of Texas and Main Street Launch out of California, design a national program for veterans around best practices. How do you effectively lend to veterans, and what metrics are you using to measure impact and success, so we’re proud of that. And we also talked to Bank of America about a program that’s in the design stage. The other piece is that I’ve had this strong interest in women entrepreneurship, and so not only do we operate a women business center, but we have a partnership with historically black college and university to try to use university resources to extend outside of the walls, into local community trying to build a capacity, and we develop a women entrepreneurship center with a predominately black university and the state African-American university and the state. And then we’re doing another, sort of piloting one with the YWCA. We call it the Coast of Veteran Women’s Center, and it’s all around trying to be a leverage and partnership with underserved sectors that we need, and this is a passion area of ours and our HBCU initiative, that is working with historically black colleges and universities throughout the state, piloting programs where you can have sustainable impact in local communities. And another trademark is the Innovation Entrepreneurship Center that we developed with Shaw University, which is a historically black college and university. Sort of unique, sort of different, but it is outside of the box thinking to address disparities that we saw within local communities. We see a need and we are brazen enough to address it. And we’re not afraid to do some things that are different.

34:14 CNOTE: Yeah, well, I think for big problems you have to take creative approaches, so it sounds like you’re testing everything you can and trying to find…

34:22 Lenwood: Oh we can. Yeah, you’re right. You’re right, absolutely right. We’re proud of those initiatives.

34:29 CNOTE: Excellent. I was gonna say that all of these initiatives you’re doing sounds like a big undertaking, but I was wondering too, if you had any big goals for the next five to 10 years for things you’d like to do with Carolina Small Business Development Fund, or…

34:47 Lenwood: Well, one of the great challenges of CDFIs, and especially CDFIs managed by people of color, is sustainability. And my goal over the next two or three years is trying to develop equity for Carolina Small Business Development Fund, to increase its sustainability ratios, to decrease the dependence upon grants and from state or federal government to survive. Because as we know, that with government being less responsive to community needs, then there is this reluctance, again, policy decision, this reluctance to invest in community development financial institutions, especially those managed by people of color. And you hear a lot of folks, “I’m not racist,” but their policies have racial impact because they are designed to not increase the wealth creation opportunities in local communities that are in need, but they decrease and devalue those communities. I keep using this word ‘devalue’ because I think that’s what’s happening. We devalue the work of CDFIs, we devalue small communities, underserved communities, by not investing in them. And so, this is this, we talk about wealth gap. The gap between investments is still strong in this country and in many states. While we’re saying politics sort of being oblivious to these community needs, and it’s racial politics as far as I’m concerned, that’s another form of gerrymandering that we don’t even talk about. You got mental soapbox. [laughter]

37:04 CNOTE: Hey you’re really close to these issues, and you’re touching them and seeing how that impacts lives on a daily basis, and I think it’s good to share your perspective with people. Like me, I’m in California and I don’t necessarily see what you see, so it’s always good to get other point of view. I don’t wanna take too much of your time, but I do have a couple, kind of practical questions that I wanna end on. And also, if you have anything to add, please. It’s great talking to you, but I think, one thing I wanted to ask you is, you talk about CDFIs needing help and support, and so, for those looking to support CDFIs like Carolina Small Business Development Fund and other CDFIs across the country, what recommendations would you make to someone, and how they can help?

38:01 Lenwood: The recommendation that I make is, look at the mission of CDFIs such as Carolina Small Business Development. Sort of meditate on that mission. Chew on that mission for a moment. And then, when you go through the vetting process, vet not only the financial information that rightfully you need, but flavor that vet and… With the fact that these organizations are serving people that would not be served but for. And that but for is very important. But for the services Carolina Small Business Development Fund, over the past eight years or nine years, over 600 businesses probably would not have been served. For the moment, $44 million would not have been disbursed to small businesses across the state but for Carolina Small Business Development Fund.

39:22 Lenwood: And so, the fact that it provided loans to individuals and categories and sectors that are unmet, and when you vet that temper it with all those factors, and perhaps your vetting would be a little different. I understand that the risk rating that you have to do. I understand the responsibilities, but I don’t think there’s enough attention paid to the mission and the work they’re doing. Sometimes they get overshadowed by the fact that, “Can they pay back?” Right? We get that. We understand that. Wanna be responsible for that, but I guess there’s a holistic approach that I think that need to be taken.

40:19 Lenwood: The other thing I would say is this, CDFI managed by people of color tend to, and I’ve said this before and I keep saying it, tend to suffer from some of the same problems that the borrowers they serve so well, suffer from, and that is access to capital. If you look at the balance sheet of CDFIs managed by people of color, and look at balance sheets of those that are not people of color, I guarantee you, if you look at the time they started and the time they are now, most of them would be great or larger, would not suffer from capital needs as much as CDFI managed by color. And so again, there’s allocation of resources to CDFIs, there’s inequity. And so I don’t think that has been addressed. We say we’re committed to CDFIs, but not really to all of them in the same magnitude. And that’s, again, something that, nationally, that I’m addressing and I’m not bashful about addressing it.

41:37 Lenwood: I’m convening along with couple other people, a group of CDFIs that led by African Americans, to begin to address this issue and looking at all alternative financial. That’s why we invited Catherine to be a presenter at this meeting, so that CDFIs managed by people of color, African-American, understand and we understand that what we go through the [capital acquisition process], we get vetted out many times. We are not looked at with the same lenses as other CDFIs. So that’s saying a lot there. But those things that I would ask people to look at when they look at CDFIs like Carolina Small Business Development Fund. Look at that mission and meditate on that.

42:35 CNOTE: Excellent point about viewing the issue holistically and looking at everything that you can look at. And just to clarify, if someone’s listening, Lenwood’s talking about Catherine Berman, she’s the CEO of CNote, which is a financial technology company that is working to be a new capital source for CDFIs, like Carolina Small Business Development Funds. That’s a partnership we’re really excited about. And hopefully can be a long-term source of capital and help you guys do the great work that you’re doing. One more practical question I have for you, is let’s say someone in rural North Carolina happens upon this interview somehow, or somewhere else in the country. And they have a small business idea. And they’re an entrepreneur. And they wanna secure a loan. What do you tell them, or what kind of advice can you give to them to embark on that journey and make it more plausible that they end up succeeding in their mission?

43:45 Lenwood: If they’re a small business and happen to run across this interview and become intrigued by what they’ve heard and wanna fulfill their dreams, I’ll say what, go for it. You can go to our website, Carolina Small Business Development Fund. Just put that in and it’ll pop up, and you’ll see on our website how to apply on each page at the top of the page. That is how to apply for a loan. And when you tap that, click that button, it will take you through the application process. Or more likely, we have regional satellite offices throughout the state. And a few in the Charlotte area, there’s a satellite office, a few in Nashville, a few in Fayetteville, a few in Greenville. They tend to work the region. And so go to that website. And you will find it. And if all else fail, I tell them to call me. And I will certainly put you in the right direction. And you’d be surprised at the number of people that call me or email me. And I don’t know how they get my email address, but they get it.

[chuckle]

45:12 Lenwood: But one thing they can always say, Lenwood responds.

45:18 CNOTE: Nice.

[chuckle]

45:20 CNOTE: Well, I don’t want to take up anymore of your time, Lenwood. It’s been an absolute pleasure to talk with you and learn more about you and Carolina Small Business Development Fund and all the great work that you’re doing. And on behalf of everyone at CNote, we’re really excited to be working with you and helping you along with your mission, because you’re really where the rubber meets the road. And you’re doing amazing work to increase economic equality in the United States.

45:49 Lenwood: Well, I hope I was able to one, provide you with kind of information you need about Carolina Small Development Fund. And two, perhaps you got a glimpse of me as a person as well.

46:02 CNOTE: Great. Well, thank you so much, Lenwood.

46:05 Lenwood: Thank you.

==End of Interview==

Conclusion

Learn more about Lenwood and CSBDF.

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