Why I joined INSIKT: Spurring the Next Generation of Small Businesses
By Oscar Gonzales, Former Obama Appointee and INSIKT’s New VP Government and Community Relations Programs
Today, we know that the backbone of the American agricultural economy is made up of hundreds of thousands of small businesses. Who will the new business owners of tomorrow be? I’ve met them, lots of them. They are the hardworking people on farms, restaurants, grocery stores, and at farmer’s markets. They have the skills, drive and desire to be business owners themselves, to chase the American Dream. What they don’t have is access to capital. The reason I joined Insikt as its VP for Government and Community Relations is because I believe we can help people achieve their dreams by providing affordable loans. For those with no or low credit scores or lack of a credit file, the is now a new possibility to become a small business owner, acquire inventory and deal with unexpected emergencies.
As an Obama appointee at the U.S. Department of Agriculture, I had the privilege of meeting some of our country’s hardest working people. I served as USDA’s Executive Director in California, overseeing Farm Service Agency programs which provide loans and crop insurance to farmers and ranchers. One of my priorities was to provide loans to our nation’s future farmers. With the average age of a U.S. farmer at 59 years old, a strategy is needed to ensure America continues to have a safe and affordable food supply. The most willing group to become the farmers and ranchers of tomorrow are today’s farmworkers.
But there was a problem with business as usual. While at the USDA’s Farm Service Agency, I conducted workshops and forums with minority and underserved farmers only to find that many of our loan programs were out of reach. Hardworking farmers were often denied a loan because of low credit scores, lack of collateral, or insufficient paperwork. It was frustrating to see so much promise and potential turned away because of an overly rigorous lending process. Unless the private and public-sector change how they lend money to the next generation of farmers, we risk losing our standing as the number one agricultural producing nation in the world.
I believe the crisis in rural lending can be solved by technology, smart regulatory policies, and good customer service. The Wall Street Journal highlighted the severity of the problem in this article. In California, the vast majority of farmers and farmworkers I met were Latino. Across the country, Latino business owners are having a significant impact on the economy. In 2015, according to The Stanford Latino Entrepreneurship Initiative which conducts the largest study of Latino owned business in America, the GDP produced by Latinos in the US was $2.13 trillion. That’s larger than the GDPs of India, Italy or Canada. Their 2017 study also found that only 2.4% of Latino-owned businesses use government loans. Credit cards and personal savings are their top source of capital, and “a third report being turned down for funding, the majority of those being declined by banks.”
Insikt’s priority in California is to raise the lending limit to $10,000 under the Pilot Program for Increased Access to Responsible Small Dollar Loans. Assemblymember Lorena Gonzalez-Fletcher is carrying AB 237 because she has heard from Latina entrepreneurs and others about the barriers when trying to access loans. The challenges that technology like Insikt’s seeks to solve affect both men and women, in rural and urban communities. It will require policy makers to adopt new business models for solving long-standing problems of access with responsible, rigorous underwriting.
Insikt does business in Arizona, California, Illinois, and Texas in 750+ stores. We are working to expand our reach to tens of thousands of retail touch points. We made an effort to expand into Florida but were denied by payday lending backed forces who look at our business as a threat. Just last week, the Washington Post wrote a storyabout how payday lenders divide communities to get their way.
Since growing up in East Los Angeles, I’ve spent twenty-five years fighting for those without a voice. I started as a community organizer, worked at the UFW (United Farm Workers) Foundation, then worked for former Assembly Speaker Anthony Villaraigosa and former Governor Gray Davis. Most recently I worked at Cal State Los Angeles supporting DACA recipients. I joined INSIKT because I believe the next battle in fighting for social justice is the fight for economic justice. It is my hope that together, we can bring financial inclusion and the prosperity that is achievable with it, to millions who work hard for the opportunity.
Full press release here.