Underserved small businesses look for banking help

El Nuevo Delicioso at 148th and Bergen, one of many small businesses in the South Bronx hungry for small business loans. Photo: Ivan Flores

Loans are in short supply, say South Bronx businesses

If Ruperto Morocho, 59, had extra dollars in his pocket he would use it to fix the faded green awning that hangs over the entrance of his Ecuadorian cafeteria on the corner of 148th and Bergen. But Morocho doesn’t have extra cash for his business. He’s had to borrow $7,000 from four different relatives just to get 20 tables and 80 chairs for one of his two local cafeterias.

The Bronx is one of the most underbanked of the boroughs, with 30.5 percent of households reporting that they rely on some form of alternative financial service, according to a 2013 Federal Deposit Insurance Corporation national survey.

According to Martin J. Gruenberg, chairman of the FDIC, being underbanked is “defined as households in which a member had a bank account but nevertheless turned to alternative financial services providers during the year to address one or more needs for transactional services such as check cashing or credit.”

Morocho immigrated to the U.S. over 30 years ago from Ecuador. He got his start in the restaurant business at a diner in Queens, but always dreamed bigger.

“I started as a dish washer, then I was a salad maker, pasta maker…they taught me to cook,” he said. Morocho opened his cafeteria and catering business 15 years later. His mortgage is through Chase Bank, but he has never been offered a credit line.

According to Michael Brady, executive director of The HUB Third Avenue Business Improvement District, “there is a lack of trust. Most [immigrants] would rather borrow from family members or local lenders in the community,” he said. Brady believes that the challenges banks and financial institutions have is breaking into immigrant communities, which are tightly knit.

The BID recently partnered with Spring Bank, a Bronx-based bank that specializes in serving underbanked communities. Spring Bank says it has had some success lending throughout the Bronx, with over 180 loans outstanding for a total of $28,840,597 as of the end of August 2017.

However, the total amount that has been lent in the Mott Haven area is just over $100,000, according to figures provided by Ines Marino, the bank’s director of small business lending. She believes that failing to break into these communities is not for lack of trying.

“Big banks think person to person interaction is for immigrants. But if I know the CEO of Apple and the CEO of a bank that I use and I give them a personal introduction, they’re more likely to do business,” said Brady. The BID recently applied for a credit line with Spring Bank. “I believe in putting my money where my mouth is,” said Brady. Approval is pending on a $50,000 line of credit the BID applied for a $50,000.

As Morocho sat at one of his new tables in his cafeteria he craned his neck and looked out of a window, pointed towards the shops nearby and, in rapid-fire Spanish, said, “There are a lot of small businesses here. We need help.”