Area small businesses need more help preparing the documentation that helps secure loans and would-be entrepreneurs more financial education to help them avoid credit problems that could cripple a startup.
Those recommendations are among the many included in the Baton Rouge Area Chamber’s first Access to Capital report.
“We heard very clearly from members of our Small Business and Entrepreneurship Council that this issue is harming our small businesses and limiting their opportunities for expansion,” said Adam Knapp, BRAC president and chief executive officer. “We learned through this report that, even though small business lending and access to capital is a national issue, the issues here in the Capital Region are perhaps even more challenging.”
The report compares the Capital Region against five metropolitan areas similar economically and demographically.
Expanding counseling resources will help small businesses prepare cash-flow projections, business plans and other information required by lenders for loan applications, according to BRAC. Expanding financial education opportunities will help produce an entrepreneurship-ready population.
The report says the low average credit score in Baton Rouge hampers entrepreneurs when trying to start a business and current business owners who want to expand. Greater financial education can help mitigate low credit scores.
Other recommendations that help expand access to capital include:
• Providing additional opportunities for low-credit borrowers. For example, boosting the number of local institutions tailored to the needs of small business owners and entrepreneurs with less than perfect credit. Community Development Financial Institutions or more Small Business Administration lending by local banks could expand economic opportunities in high-poverty areas of the region
• Protecting the Angel Investment Tax Credit could increase equity financing opportunities. Since 2011, the Angel Investment Tax Credit program in Louisiana has incentivized more than $201.4 million in investment into small and growing companies. Angel investors typically make a one-time investment in exchange for a piece of a business or convertible debt.