How a Mississippi nonprofit helps Black entrepreneurs get funded

How to start a business if there is nothing to use as collateral? In most cases, the answer is simple: you can’t – the bank won’t lend you the money. But one Mississippi-based nonprofit called Higher Purpose Co. is trying to change that for black business owners in the Mississippi Delta.

In a country still reeling from the legacy of slavery and Jim Crow-era economic inequality, the organization helps more than 500 black-owned businesses, 87% of which are led by black women, acting as an advocate and “capital ally” to promote. ownership and economic justice, said founder and CEO Tim Lampkin. Among its offerings are financial support mechanisms designed to reduce systemic barriers in financial institutions that have historically hindered Black business development in Mississippi.

“We can help entrepreneurs get access to zero-interest loans that don’t require collateral, that don’t require any minimum credit score,” Lampkin said in an interview with David Brancaccio. “Because we know, especially when we work with black businesses, collateral and credit [requirements] there are two main issues that prevent black businesses from seeking the capital they need.

Below is an edited transcript of their conversation.

David Brancaccio: You may have attended these things – I once attended a [Small Business Administration] training on how to be an entrepreneur, and the guy on stage looks at all of us and yells, “Where are you going to get the startup money? And don’t tell your parents!” I mean, startup money is hard. And what, in your experience, is harder for certain groups of people?

Tim Lampkin: Definitely. When we look at the work that we do, especially here in Mississippi with Black-owned businesses, we know that there are so many different barriers to access to capital. So over the last six years, we’ve worked very hard to break down some of those barriers. Over the past 2½ years, we have been able to deploy over $1 million in capital to black-owned businesses in Mississippi. And so we’re very excited about that and really trying to change the narrative of how access to capital is provided here in Mississippi, but [also] across the country.

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“Buffet of capital opportunities” for companies

Brancaccio: How do you get the money to do it? It’s partly about mating, isn’t it?

Lamp: That’s why we consider ourselves a capital matcher. We have what I am describing [as] a buffet of capital opportunities where we can really meet the entrepreneur where they are. So we’ve got grants, we’ve got zero-interest loans through our Kiva partner, and we’ve got low-interest loans from community development financial institutions, and then the bottom line is venture capital. Therefore, we can offer a unique approach to this process. And by working with these entrepreneurs, we can raise grant funds that we can re-allocate to businesses and then raise capital that different financial institutions have to really match with the entrepreneur.

Brancaccio: You mentioned Kiva partners. It is a separate organization, a non-profit organization.

Lamp: So we are the only Kiva Center in Mississippi. So we can help entrepreneurs get access to zero interest loans that don’t require collateral, that don’t require a minimum credit score, because we know, especially working with black businesses, collateral and credit [requirements] there are two main issues that prevent black businesses from seeking the capital they need. So working with Kiva has been huge to really help our entrepreneurs access that kind of affordable capital.

Overcoming systemic barriers

Brancaccio: The bottom line is that a traditional source of capital—borrowing from a bank—may be structural problems in that system, right? And you think banks are still using criteria that unfairly discriminate against potential buyers who are people of color?

Lamp: Over the past 2½ years, especially since the pandemic, several financial institutions have been more creative with their lending criteria. And then it started to really creep into the traditional criteria, right? So I think the pandemic has shown us that there’s a lot of flexibility in terms of repayment structures, interest rates and things like that. And even when we think about closing costs, it makes capital more affordable. However, returning to this provision has been an obstacle for many black businesses. That is why we have created our own loan guarantee fund, which we use as collateral. So if the person has no collateral, we can essentially reduce the risks to the borrower as well as the lending institution by guaranteeing that loan up to 50%. So if something happens with this loan, you know, it’s still a win-win situation for the financial institution. So we’re seeing some progress in many financial institutions and how they’re partnering with entrepreneurs to create new products. But there’s still a lot of work to be done in this area as we continue to really use access to capital as a way to open up business ownership to so many, especially here in Mississippi, as it relates to black business owners.

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Brancaccio: So this funding network is one thing. Do people also lend expertise, guidance? Is it also part of the network?

Lamp: Definitely. So our model includes education, consulting and funding. So in terms of the education work, we have quarterly meetings with our 500 members across the state, and then we also have monthly meetings with these entrepreneurs and bring in speakers, trainers and facilitators. And then we go on to provide one-on-one consulting with these entrepreneurs based on where they are in their business, and then we wrap it up with the financial part, right? Capital access plot. So it’s a very unique model in itself and we’re building this three-pronged approach where we can meet the entrepreneur no matter where they are in their business stage because it’s very important. Because without advice, you have capital and you may not know what to do with it, or you may not be able to spend it wisely. Therefore, it is very important to combine this capital with consulting and continue to provide ongoing education and support to these entrepreneurs. And you know, making sure we’re with them every step of the way.

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Brancaccio: I have a “brain drain” question, Mr. Lampkin. You’re from Mississippi, I understand. And you may have had options, but you chose to serve your home country and not move to where the big money is.

Lamp: Definitely. That’s why I believe in purpose. And I truly understand that this is the work I am called to do at this particular time and place. I think what’s often happened is, especially when you look at millennials, when we look at different opportunities in bigger cities and things like that, it can definitely be more profitable because it’s about money and finance and all of that. materialistic things. And at the same time, does it really make you fulfilled as a person? And it’s an opportunity for me to do amazing work. I also get paid to do this work [as] see the direct impact in my community. And it really is also about leaving a legacy. And so I encourage anyone listening to this who is on the fence to wrestle with how they can engage or stay engaged in their hometown or community. There are ways to do it, there are ways to find the problem and then be part of the solution. And that’s what I did when I created Higher Purpose Co.

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