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This is MARKETPLACE. I'm David Brancaccio.

The Federal Reserve Bank of Minneapolis has launched a survey of several hundred Hmong business owners in households in St. Paul to figure out how well the banking system is working for these entrepreneurs who fled Laos during the Vietnam War. Minnesota Public Radio's Lynette Nyman reports on the business life of the Hmong community of St. Paul.

LYNETTE NYMAN reporting:

Pahoua Vang tried for several years to get a bank loan to start a business. After being rejected, she gave up knocking on bankers' doors and turned to her family. Pahoua's parents, in-laws and siblings lent her some start-up capital. This summer she opened Budget Fashions on University Avenue in St. Paul.

Inside, Pahoua stream presses a pair of slacks she hemmed for a customer while her mother stitches beads to a traditional Hmong costume. Pahoua says going to banks was a waste of her time.

Ms. PAHOUA VANG (Budget Fashions): They don't really trust you much about what you're doing. And also, my--my English not so good so I cannot tell them some thing that they can trust me.

NYMAN: Pahoua didn't have a credit history or a business plan, but she says she wasn't asking for much money, maybe $ 30,000 or $ 40,000 dollars.

Ms. VANG: The bank should take a little risk for a small business, too, because the business people, they take a risk themselves, too.

NYMAN: The Federal Reserve Bank of Minneapolis wants people like Pahoua Vang to participate in a survey that officials hope will illuminate the obstacles to Hmong people's access to capital. The results are important, not just to Minnesota's 60,000 Hmong residents, but also for the state's other fast-growing immigrant communities.

Federal Reserve research director Art Rolnick says it's getting involved because it's the Fed's job to ensure financial institutions meet community needs.

Mr. ART ROLNICK (Federal Reserve Research Director): Clearly, some of the Hmong have used banks and have taken out loans, and we want to--we want to identify where it seems to be working and why, and how they've overcome sort of the obvious barriers.

NYMAN: The survey's modeled on one the Fed conducted in 1999 among black and Hispanic small business owners in Chicago. The results revealed that nearly 70 percent of the surveyed owners relied on personal savings rather than bank loans for start-up capital. In the case of the Hmong, Rolnick says he expects a similar pattern. He says it's likely that language and culture will be two of the main obstacles to bank credit for the Hmong.

Mr. ROLNICK: We're trying to look a little bit deeper to see where we might be able to improve the channels of communication and open up these--or reduce these cultural barriers.

NYMAN: Some banks are already taking steps to deal with the problem. Each year, University Bank in St. Paul lends several million dollars to Hmong entrepreneurs. That amount has doubled since banker Toajsang Lure joined the commercial lender early last year. Lure says 80 percent of his clientele is Hmong. Lure, who describes himself as a non-traditional banker without the finance background, speaks Hmong and English. He says his background gives him insight into what kind of financial resources Hmong people are able to draw on.

Mr. TOAJSANG LURE (University Bank, St. Paul): Like we say, 'Show me the money,' you know? Show me the money. And sometime--I mean, ask the customers that, if you have money, I like to see your deposit in the bank, make sure you have the money and they open an account and deposit like $ 50,000 cash at a bank and deposit, you know, $ 100,000 cash at a bank, it's unbelievable.

NYMAN: He's also uniquely situated to guide Hmong clients through the intricacies of formal business practices.

Mr. LURE: I need to make sure that some of the Hmong people understand the language, understand the terms or understand, for example, like the business plan, to make sure that they understand the process that we use to underwrite the loan.

NYMAN: That's something Pahoua hopes to experience some day when she's ready to expand Budget Fashions. If banks turn her down, she'll still have her family.

Ms. VANG: First of all, they trusting myself that I can make a good living in the future. So when I accomplish my goal, not just me, the one that living good, but also them too.

NYMAN: A preliminary report of the Federal Reserve Bank survey of Hmong business owners and households should be available next spring. If the tool proves useful, Fed officials plan to survey other minority business owners in the Twin Cities. In St. Paul, I'm Lynette Nyman for MARKETPLACE.