Increasing financial wellness for LA's entrepreneurs

Income Inequality

County of Los Angeles

Expand existing project, program, or initiative

Entrepreneurship is essential to a thriving and equitable economy. LA County's 244,000 small businesses are cornerstones in their communities; they create local jobs and combat income inequality. Yet despite this important impact, entrepreneurs-particularly women and people of color-face steep systemic barriers to accessing the capital they need to start and grow a business. Women and entrepreneurs of color regularly face lower loan approval rates, smaller loans and higher borrowing costs for bank financing than their white male counterparts, even when they have similar credit histories and business types. The Federal Reserve finds that business owners of color pay interest rates that average 32% higher than what white business owners pay. These systemic barriers can discourage aspiring entrepreneurs from making the leap to starting or growing their own firm. This results in a less innovative entrepreneurial ecosystem and inequitable access to a crucial wealth-building opportunity.

Financial literacy is the foundation of a successful business and the first step to successfully obtaining a business loan. This project will increase entrepreneurs' ability to organize their finances, documents and business ideas as they prepare to apply for capital. We also will help entrepreneurs find and connect with technical assistance (TA) providers who can provide in-depth assistance as needed. Direct support: We will partner with Women's Economic Ventures (WEV) to offer a free financial empowerment webinar series in English and Spanish. The "Get Back to Basics" series will comprise six 90-minute interactive webinars that explore topics such as understanding credit and debt, budgeting and saving for the future. We will offer virtual office hours to attendees who need more in-depth assistance. We also will help attendees connect with vetted TA partners for additional business support as needed. Indirect support: Our online resource platform Venturize.org will help more entrepreneurs access the financial education and resource connections they need. The site features a variety of free financial wellness materials, including a "Borrowing 101" guide, specific steps needed to get loan ready, how to identify and avoid predatory lenders, and more. The site also helps visitors find local service providers by ZIP code and connect with responsible lenders. All lenders on the site are vetted to ensure they provide responsible loan products suitable for smaller businesses.

In the short term, this project will ensure LA's entrepreneurs have access to the education and resources they need to take the next step on their business journey. This knowledge will help them successfully start and grow stable businesses, access capital as needed, create quality jobs and increase financial security for themselves and their employees. Long term, we believe entrepreneurship is key to decreasing income inequality and increasing financial stability. We will continue to expand our programming to reach more entrepreneurs and further increase access to business capital and support. As we focus on supporting those who have been historically blocked from this access, including women and people of color, we envision an ideal LA County where current and aspiring entrepreneurs have equitable access to business capital and support regardless of gender, ethnicity or linguistic ability. LA's thriving small business economy will accurately represent our diverse communities.

In mid-March 2023, we completed a pilot session of the Back to Basics series in both English and Spanish, targeted for LA-based women entrepreneurs. We engaged 99 participants; 89% were women of color. One month after the series, participants shared feedback via an online survey. A majority (80%) of respondents reported seeing or expecting to see an increase in their business revenue and profits after employing what they had learned. About half (55%) had set up separate business banking accounts, and 40% had already increased their customer base; 22% had hired at least one new employee. Respondents also reported feeling more confident about evaluating loan terms, filing taxes and increasing savings. Perhaps most importantly, 78% of respondents said their financial-related stress had been lowered. We continue to follow up with participants to assess their progress and learn how else we can help. We will build on these lessons learned as we expand the program to welcome all genders.

We will partner with Women's Economic Ventures (WEV) on a financial empowerment series (offered in both English and Spanish), "Get Back to Basics: an interactive webinar series to put you in charge of your personal finances." As part of this program, WEV will present three 90-minute webinars that explore topics such as understanding credit and debt, budgeting and saving for the future.