In the last 25 years, large companies have turned from banks to capital markets for growth financing. Small businesses, however, have not made this shift — 90% of all small business finance takes the form of “plain vanilla” letters of credit and term loans from banks. The result: many urban small businesses currently view banks as unable to serve them, creating significant dissatisfaction in the market. Other providers operating in the urban small business market are not fully engaged.

• Banks underserve inner city small businesses: relationship management is no longer a priority and consolidation has created an inflexible infrastructure.
• The failures of savings and loans banks has led to tightened regulations and reduced risk-taking by banks.
• Most investment banks and private equity and venture capital firms are not interested in the urban market and are poorly positioned for successful participation.
• Public-sector and government solutions remain fragmented and limited in both scope and impact.
• Community Development Corporations, while addressing important needs, are often narrowly focused and provide only small-scale funding.