Empowering Customers through Coaching and Business Services

To successfully expand access to capital, simply offering loans and adjusting underwriting criteria is not enough. Many entrepreneurs, especially entrepreneurs of color, face substantial barriers in applying for loans. The language and concepts of finance can be mystifying and inaccessible. Trauma, including previous bad experiences with financial institutions, can compound the situation. And then there is the more universal challenge that small business owners face in making time to not only run the day-to-day of their business, but also to plan, strategize, and grow their business.

Recognizing the barriers that diverse small business owners face and building on our Equitable Lending Initiative, in 2021 Craft3 launched a Business Services program that would focus on supporting entrepreneurs before and after they’ve applied for a loan. By providing one-on-one coaching, offering webinars on business topics, and reimagining the loan intake process, Craft3 hoped to empower diverse entrepreneurs.  

Person-Centered Coaching

"Small businesses are the heart of our local economies, that is why my life’s work revolves around empowering immigrants and folks of color to leverage entrepreneurship to create vibrant communities and build wealth for their families."

Aldo Medina Martinez, our first Business Services Program Lead, approaches his work from a coaching perspective. Central to this is the belief that our customers are resourceful and capable, or as Aldo puts it, “experts in their own lives.” They're the ones that know their lives and businesses better than anyone. He says that a lot of coaching is partnering with the clients to ask questions and set goals so they can find their own answers. Aldo is tremendously supportive of his clients but is clear that his job is to teach people how to do things, not to do things for them. The approach is person-centered, focusing on developing clients' skills and empowering them.

For example, when Aldo works with clients on financial projections, he makes sure they understand the how and the why. He may begin by going over a cash flow or other statement line by line, doing so in Spanish if the client prefers. Aldo helps his clients see how cash flow projections are not just a hoop they need to jump through to get a loan, but also a valuable planning tool.

Business Services also helps entrepreneurs prioritize working on their business as opposed to focusing solely on the day-to-day. Aldo coordinates business resources, including referrals to a network of culturally competent professional service providers, with subsidies for low-income entrepreneurs. The program also sponsors webinars on business topics including legal contracts, tax and bookkeeping, and branding and marketing. One of the goals is to provide a supportive space for entrepreneurs to develop skills and find professional services. It’s also a chance for business owners to take a step back, expand their perspective, and plan for the longer term.

Aldo engages with clients on a broad range of topics, including how to get ready to apply for a loan. In this work, he uses Craft3’s Definitive Guide to Getting Loan Ready. He states, “It’s extensive, incredible. I think it's really important that there’s a comprehensive guide to getting folks ready for loans because you can provide it to people, to clients, to partners, to anyone that's even thinking about financing.” The guide offers step-by-step explanations and tools designed to demystify the process.

While Aldo at times describes his work in a matter-of-fact manner, his passion is clear, and he is quick to share aspects of his own story. “I'm an immigrant myself. When we came to this country, it was rough. I think entrepreneurship is one of the ways that people of color and immigrants can earn a living without having to work in exploitative ways. It’s one way that we can address the racial wealth gap. My career has focused on providing resources to that demographic. It's deeply personal because it reminds me of my parents and my grandparents. I want to continue that legacy and give back. It's become my life's work.”

First, Do No Harm

“I love meeting with people, listening to their plans, and being part of the chain that will help them achieve their dreams,” Ana Ruiz Kennedy, Business Liaison.

For many Craft3 clients, Ana Ruiz Kennedy, Business Liaison, is their first point of contact. As a commercial lending intake specialist, Ana receives leads from the Craft3 website and other bankers, direct phone calls and referrals from her own network. In initial conversations whether over phone or email, Ana emphasizes understanding the community and the potential client’s history, business and risks. She engages business owners and listens carefully so she can answer key questions such as:

• Who is the borrower, what does the business do, and does it make money?
• What is the purpose of the loan and how will it help the business?
• How will the borrower repay the loan?
• Why is this a fit for Craft3?

With a background in community development, marketing and finance, Ana approaches lending with the physician’s motto of “first, do no harm.” Many people who have difficulty with traditional financing have been victims of economic exclusion and predatory lending. And for some who seek a loan, financing may not be the answer as a loan may in fact not help their business succeed.  Ana estimates that about 80% of applicants are not “loan ready.”

If a customer isn’t yet loan ready, she may connect them to coaching so they can get there. If a loan is not currently appropriate, she may suggest other ways to grow their business. If they are loan ready, then she assigns them to a Craft3 lender who will guide them through the loan process. Ana states that Craft3 wants to “graduate” clients to traditional financing while remaining available for repeat business if needed.

Somebody in their Corner

"As a minority small business owner, I have experienced some of the systemic challenges that many of our borrowers face. Craft3’s holistic mission to empower, educate, and advocate for small business owners makes me proud to be part of the team.”

In 2023 Business Services added a second coach, Jon Bebe. Jon is a fiduciary financial advisor with FINRA and Series 65 credentials, but he also has a Master's in Counseling and had his own private practice in community and couples counseling. As Jon says, “money is very emotional, a real challenging flashpoint for a lot of people.” Jon is also a minority small business owner who has his own business outside of Craft3. He understands the importance of connecting with similar entrepreneurs.

“I’ve worked hard to connect to a strong referral network. I bring that network and my experience in the small business community to my work at Craft3. It's interesting being a coach in this space. The kind of clients we work with don't expect to have somebody in their corner, that's not trying to close a deal or make money off them, and who is literally just saying, hey, I'm here to empower you.”

Coaching can include helping with cash flow projections, business plan review and feedback, goal setting and commercial loan application support. Businesses that come to Craft3 are often inexperienced in raising capital and are looking at financing as an opportunity to expand their business. Some clients are sophisticated with financials, others not so much. Either way, Craft3 tries to meet clients where they are, collaborate and connect them with resources and encourage strategic change.

One of Jon’s recent clients is a first-generation Cambodian immigrant, a refugee and a survivor of the Khmer Rouge, who has had a business that sold durable goods at places like Costco and QFC. Now she’s pivoting to offer a low-glycemic index sugar that is organic and sustainably harvested in Cambodia. She has a relationship with the farmers and would be the sole importer for the U.S.

Jon explains, “It's really been a good opportunity for me to work with someone that has an existing successful business but has an opportunity to expand into a market and needs some guidance. She's got a great product, a great story, and a great reason for doing this. She probably couldn't get financing at a traditional bank because this is a working capital idea, and it’s a new product.”

“The cool thing about working at Craft3 and working with someone like this is that the mission alignment is very strong. We can help tee her up for success so that she becomes not only a successful business owner, but also a good borrower and hopefully a brand ambassador for Craft3.”

Looking Beyond Numbers and Towards Transformation

Much of the traditional banking and finance world is all about the numbers. Net, gross, profit, loss. Aldo prefers to look beyond the numbers, realizing that banking, and business services in particular, can be transformational rather than merely transactional.

Aldo explains, “I think what Craft3 does really well is to understand that a credit score is one part of the equation, whereas for other institutions that number is all important. Craft3 wants to understand the reason behind that number. Often someone has a lower credit score not because they didn't want to repay their credit, but perhaps because they couldn’t. For example, a medical emergency happened, and someone landed in the hospital, and they ended up with a large bill because they didn’t have health insurance. So they got into collections. It's a symptom of larger systemic issues that disproportionately impact communities of color.”

While Business Services is a small team, they work hard to meet clients where they are and to empower them to set and meet goals. Since the launch of Business Services in mid-2021, Craft3 has provided 120 entrepreneurs with one-on-one business coaching. Of those, 24% chose to receive services in Spanish. As a result of this work, 33 entrepreneurs of color applied for financing and Craft3 made 17 new commercial loans totaling $1.3 million.

These numbers may sound small, but the loans would have otherwise not been made. Business Services is also often transformational for its clients. The work that Jon, Aldo, and Ana do helps make our customers feel at home in the world of finance. It also helps clients become more comfortable asking questions, setting goals, and ultimately taking control of their own story. Business Services strives to support their clients without rushing or pressuring them. The work can be slow and it’s not uncommon for clients to take months to get ready to apply for a loan as the process may require substantial work and preparation. Craft3, however, is in it for the long haul, focusing on building relationships based on trust and growing an ecosystem of support and services for entrepreneurs of color.

Aldo explains financial coaching as “working side by side with the client and really partnering and collaborating and asking those questions for them to find the answers. Often my job is asking the right questions to prompt clients to generate their own answers. It takes time, but it can be truly transformational.”