Partnership helps Maine immigrants get zero-interest business loans
Deborah Bafongo started her business in South Portland, Angels of Love Event Design, in 2019 without any outside loans or grants.
Bafongo specializes in providing decorations for formal events, especially weddings, and had hoped she would be able to work on enough weddings in 2020 to be able to recoup the money she spent on equipment. However, when the pandemic struck and weddings were annulled en masse, Bafongo found herself in need of additional help to keep her business afloat.
Through a mutual friend, she heard about a program offered by the Greater Portland Immigrant Reception Center that would provide interest-free loans to business owners like her. Bafongo, who immigrated from the Democratic Republic of Congo in 2014 and lives in South Portland, received a loan of $ 2,500 with a repayment term of 21 months. She plans to use the funding to purchase a larger storage unit to use as a showroom for her designs, as well as more equipment.
“I really needed the funds,” she said. “As an immigrant, I am truly grateful that this platform is there to help us be successful in the careers we have. … At this point (due to the pandemic) I really needed something from somewhere to help me.
Funding for Bafongo’s business is the result of a partnership between DreamxAmerica, or DxA – a national initiative combining storytelling and impact to support immigrant communities founded by Andrew Leon Hanna in 2018 – and Kiva, a goal-oriented organization. non-profit that allows people to lend money online.
DxA released the storytelling component of their project, a documentary starring three immigrant entrepreneurs in North Carolina, in November 2020. When it came time to kick off the impact side of DxA’s project, Hanna approached Rohit Agarwal – the head of Kiva’s U.S. program and a connection from the time they both spent working for global management consulting firm McKinsey & Company – to form a partnership that could provide funding to immigrant business owners.
Immigrant entrepreneurs may face difficulties accessing traditional bank loans – sometimes because they do not have an established credit history in the United States, and sometimes because of racial or cultural discrimination.
“Often the banking system does not treat low-income minority immigrants as well as they should,” Hanna said. “Sometimes there is a lot of mistrust and sometimes there are unfair prices. … Why we like Kiva is that (the loan) is very pure, it’s very simple. There are no research rates or other hidden charges. It’s zero interest, zero fees.
DxA partners with four local organizations nationwide – including the Visitor Center – that advertise the loan opportunity and support business owners through the application process. DxA staff edit the applications to tell their stories more concisely with the goal of attracting as many lenders as possible, and a Kiva team reads the official applications and determines the loan amount the company is entitled to. Then, DxA promotes the borrower profile of the business owner until the loan is fully funded.
Agarwal said the local organizations that DxA partners with are key to building confidence in Kiva’s lending program.
“The primary way for us to build trust – and within many of these communities there is rightfully a decent amount of distrust of traditional financial institutions – is through trusted partners on the market. ground, ”Agarwal said. “And here’s DreamxAmerica, which I think has done a fantastic job of building trust through immigrant reception centers (and) through various other intermediaries to say, ‘Hey, here’s a good source. capital, free of charge, without interest. “”
These local organizations often already have close partnerships with immigrant business owners and can serve as a trusted intermediary.
“Most immigrant small business entrepreneurs aren’t going to just walk around the Kiva site and say, ‘Oh, that looks good,'” Hanna said. “You need someone to witness that.”
The Welcome Center business center, which launched in 2017, fulfills this role in Maine by connecting immigrant business owners with various sources of capital.
“Research shows that immigrants, nationwide, are more likely to start businesses and small businesses than native-born Americans,” said Reza Jalali, executive director of the center. “In doing so, (business owners) are creating jobs not just for themselves, but for others in the community. Part of what we do at the business center is help immigrants access finance and then connect them with lenders. “
Until now, seven business owners from Maine have had their loans fully funded through the DxA-Kiva Special Initiative, and two more are still in the process of funding.
Navid Ahadzadeh, founder and owner of Scratch Master Mobile, a Casco-based mobile auto repair service, knew Jalali through the local Iranian immigrant community and successfully applied for a loan of $ 8,500 to expand his business. . He used part of the loan to buy a new pickup truck.
“Because my business is a mobile business and (because of) my old van, the options I have were pretty limited,” Ahadzadeh said. “So when I have a bigger van, it (will be) more reliable, more professional. It will look professional.
Ahadzadeh moved to the United States in 2009 from Sari, Iran due to persecution in his home country which limited his career options.
“I am a Bahá’í, and the Bahá’ís are a heavily persecuted religious minority in Iran,” Ahadzadeh said. “Bahá’ís in Iran are not allowed to pursue higher education, and many Bahá’í-owned businesses are shut down by the government. So knowing that people are helping you with the loan and everything in another country makes me very happy.
USEFUL FOR MUSLIMS
In addition to contributing to immigrant business owners’ limited access to capital, interest-free loans also hold religious significance to many. Traditionally, Islamic law has prohibited paying interest on loans, leading many Muslim immigrant business owners to seek loans from sources other than traditional banks. This was the case for Humza Khan, the founder of Inclusion Maine, a Westbrook-based diversity, equity and inclusion consultancy. He received a loan of $ 6,500.
“One thing that interested me in this program was the uninteresting component,” said Khan, who was born in Pakistan but raised primarily in Maine. “I could obviously go – anyone can go to a bank, or they can go into venture capital, they can go and get money… but for me, really for religious reasons, I wanted to avoid interest. . “
“(With the loan) I can invest in the things I’m working on and pay it back over a period of time while respecting (my) religious beliefs,” Khan added. “That’s what attracted me to this program over a more traditional option.
Khan used some of the funding to pay for more advertising, but his main goal is to host a conference.
“One of the things I hope to focus on is a conference on diversity and inclusion,” Khan said. “So it’s about bringing together people who are interested in this work and learning what the local challenges are and how we can overcome them and what works. … I hope (the conference) won’t be too costly for people, so this loan will definitely help me get started to make this possible. It has already helped.
For Jalali, the program is also valuable as an indication of the opportunities available to immigrants to Maine.
“Bringing money to the state is always good news and supporting our new neighbors who have been displaced by wars, famine and persecution,” Jalali said. “So this is good for Maine in a state where we are dealing with an aging workforce. We need more immigrants and can (this program) become a way to attract new immigrants?
“Can that be a way for some immigrants from Vermont, New Hampshire, Massachusetts to look at Maine and say, ‘Well, that’s a great state to start a business? It will be really good for us in the long run to attract more businesses (and) more young people (who are) qualified, educated and motivated to come and add to the wealth of our community.
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