Financial Tech Startup Helps Increase Profits for Black-Owned Businesses
Kelly Ifill, a 37-year-old entrepreneur, comes from a family of Black business owners. Her father has a contracting business and her grandmother has a cleaning service. She has other relatives who run small businesses yet Ifill did not set her sights on pursuing the same path.
“I had no interest in being an entrepreneur,” Ifill, 37, told CNBC’s Make It. Ifill has experience as a school teacher, MBA candidate, and staffer for seed-stage venture capital firms.
A resident of Brooklyn, New York, Ifill observed multiple businesses struggling to remain in operation. After seeing the small business difficulties to obtain approval for commercial checking accounts and bank loans from traditional banks, Ifill believed opening her own company would best support these businesses.
Often, Black businesses are less likely to be approved for commercial checking accounts and bank loans. However, when presented with the opportunity to obtain a loan, Black business owners often pay higher rates, according to CNBC.
In January, Ifill launched an online banking platform called Guava, which is geared towards Black small-business owners. The company has gained over 3,000 members. The company’s members consist of “a diverse range of businesses, from candle companies to spin studios.”
Although investments in Black-owned startups has soared in recent years, these companies only represent less than 2% of funding. Furthermore, less than 1% was for companies run by Black women.
Every entrepreneur has not had equal access to the resources that would allow them to build sustainable, scalable businesses. That’s a problem for everybody, Ifill said. Her understanding of challenges in entrepreneurship resulted in Guava’s early success. “I have grown up understanding what that experience is,” she says. “Especially for Black people [and] especially for immigrants in this country.”
Guava is not a traditional bank. The online banking platform provides services through New York’s Piermont Bank, a fully accredited Federal Deposit Insurance Corporation member. Small-business owners can open a checking account for their business through Guava “for free in minutes,” according to the company’s website. Each account is linked to a government ID to prevent fraud. Meanwhile, up to 250,000 in deposited funds are insured by the FDIC.
Guava offers pilot programs in progress that provide options for business loans. This month, the company launched Huddle, which serves as a network for members to share information and learn from industry leaders and financial experts.
Ifill noted that her company is “a profit driver.” She believes if more people support Black-owned businesses, banks and financiers investing in these businesses would benefit significantly.