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Councilman questions business-loan program’s fairness to minorities

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With Salt Lake City ready to shell out $250,000 in grant money to the Utah Microenterprise Loan Fund, at least one City Council member wants to know what the fund is doing to attract more minority entrepreneurs.

The fund, a 13-year-old nonprofit that works with Salt Lake City to grant loans up to $25,000, uses city money to jump-start businesses that can't get traditional loans through banks. The small loans typically go to service businesses, which are easier to start with small loans.

Yet, roughly three-quarters of the loans the fund has given went to white entrepreneurs, with Hispanic, black and other minorities making up the balance. In Carlton Christensen's council district, that's lower than his observed average of minorities.

"Are we sure that we're really getting to everybody that we ought to in an equitable way?" Christensen said. "I'm seeing a lot of small minority businesses crop up in my area, often because that's where the people live. I just wanted to make sure that they were doing their best in trying to reach out and give them a change to get going."

Kathy Ricci, executive director of the loan fund, said that the group gets most of its loan applicants through word-of-mouth referrals, but it would love to have more targeted advertising.

"We try to think (of) where we can find small-business people that can't get bank loans or don't think they can get bank loans because they know they don't have collateral," Ricci said. "We're always trying to see how we can identify this crowd. That is our biggest challenge — getting the word out that we exist."

Ricci said she can reach the Hispanic community fairly easily through a chamber of commerce and numerous community organizations, but she struggles to find a conduit to the black, Pacific islander and other minority communities.

"If there were some sort of local newspaper of the ethnic communities, or an association or a gathering place," the loan fund could more easily reach potential clients.

Ricci warned that advertising more to minority groups won't automatically net the fund more applications.

"There could be a really large population of a certain ethnicity, but unless that's right for them or their families . . . I don't know that seeing some sort of correlated percentage is necessarily a good thing," she said.

The City Council is to vote on the grant at its meeting Tuesday.

E-mail: kswinyard@desnews.com