News Column

Lender for minority businesses comes under microscope

September 2, 2014

By David Breen, Orlando Sentinel



Sept. 02--For more than 25 years, the Black Business Investment Fund has worked in relative obscurity, handing out loans to local entrepreneurs and small businesses who might have trouble getting bank financing.

But a pair of recent developments has put the Orlando agency in an unaccustomed spotlight, and at least one local official wants to take a closer look at how the nonprofit microlender operates.

Last month, a judge ordered BBIF to pay more than $1 million to the state Department of Economic Opportunity after finding the organization charged excessive loan-servicing fees -- 12 times as much as allowed by the contract -- while administering a statewide program to buttress local businesses during the economic downturn.

And the city of Orlando also will be getting some money back from BBIF. Agency CEO Inez Long agreed to repay $878,000 in incentive money the agency received for a downtown-development project that never materialized.

Based on the summary judgment awarded in the state lawsuit, Orange County Commissioner Fred Brummer is calling for the county to reassess its support of BBIF.

"My concern is that what we're doing is funding a refund to the state of Florida," Brummer said. "They have to use our money to pay back other taxpayer dollars that were not handled appropriately."

Brummer believes the county needs to have more detailed information before committing any more money to the organization.

"I'm not far enough along to take a formal position that something is wrong," he added. "The only thing I know is that I don't know."

The county, the city of Orlando and the state all contribute funding to BBIF each year to assist in its mission of helping minority-owned businesses. BBIF said it has provided more than $43 million in business loans statewide, creating or sustaining more than 11,500 jobs in the process.

In response to Brummer, Orange County Mayor Teresa Jacobs stated in a memo that the county "has had a long and productive relationship with BBIF."

Long said the organization would appeal and defended her agency's handling of the contract.

"We are clearly disappointed with the summary judgment," Long said. "We feel the decision was completely unfair -- not only to BBIF, but to all the small-business owners in our state."

Long said the prospect of having to repay the state a seven-figure sum "would dramatically impact how we administer funds to growing companies that are still feeling the impact of the economic downturn."

She noted that, despite the lawsuit, the state saw fit to enter into another contract with BBIF to administer loans in four counties.

BBIF leadership is expected to address county commissioners at a September meeting. The county is not due to disburse any money to the organization until October.

Orange has budgeted $135,724 for BBIF in the upcoming fiscal year.

Representatives of Orange County and the city of Orlando said the BBIF submits quarterly reports on its operations, and that it is in good standing with both governments.

"We've had a positive relationship with BBIF over the years and they have assisted a good number of businesses that we have sent them," said Brooke Bonnett, economic development director for the city of Orlando. "At this point all is well" between the city and the organization, she said.

According to the organization's 2011-12 tax return -- the most recent available -- the organization reported total revenue of just over $1.2 million. It collected $599,231 in contributions and grants and $628,262 in program service revenue.

Just under 40 percent of total revenue -- $476,592 -- went to employee salaries, compensation and other benefits. Long reported compensation of $152,098.

Long said BBIF would work to address the concerns raised by Brummer.

"We are hopeful that BBIF will retain Orange County funding," she said. "It would dramatically impact our ability to meet the needs of the local small-business community without it."

dbreen@orlandosentinel.com or 407-420-5189

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(c)2014 The Orlando Sentinel (Orlando, Fla.)

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Source: Orlando Sentinel (FL)


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