FEDERAL RESERVE BANK OF MINNEAPOLIS LAUNCHES SURVEY TO AID LOAN PERSONNEL WHO
LEND TO HMONG BUSINESS ENTREPRENEURS
REPORTERS: LYNETTE NYMAN, December 26, 2000
DAVID BRANCACCIO, anchor:
This is MARKETPLACE. I'm David Brancaccio.
The Federal Reserve Bank of Minneapolis has launched a survey of several
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.
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
Federal Reserve research director Art Rolnick says it's getting involved
because it's the Fed's job to ensure financial institutions meet community
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
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
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.