Access to capital, education levels create challenges for small businesses in region

Challenges small businesses in the Mississippi Delta region face include access to capital and connecting to outside sources, according to a live question-and-answer session hosted by the Delta Regional Authority on Friday via Reddit.com.

The authority, which promotes economic development in 252 counties in Missouri, Alabama, Arkansas, Illinois, Kentucky, Louisiana, Mississippi and Tennessee, hosted the Q-and-A at the tail end of National Small Business Week for business and entrepreneurship experts to discuss the importance of small businesses to economic development.

Chronic issues of poverty and economic challenges, education attainment and barriers and access to health care are major hurdles in the Delta, Chris Masingill, federal co-chairman of the Delta Regional Authority, said during the session.

Research has found some rural parts of the Delta lack a supply of adequate risk capital, or funds to invest in a startup business, said Dr. James Stapleton, executive director of the Douglas C. Greene Center for Innovation and Entrepreneurship at Southeast Missouri State University.

"Especially early stage startups often lack capital to validate business models," he said during the session.

The difference in collateral values between rural and metropolitan areas also affects the ability of borrowers to access working capital, added Sam Walls and Al Hodge of the Arkansas Capital Corporation Group, a privately held group of for-profit and not-for-profit corporations that help entrepreneurs.

Another issue is larger, money center banks in metropolitan areas don't always work well in rural areas, and local rural banks are constrained under federal regulations to respond to local capital needs, Walls and Hodge said.

A challenge is to convince such rural banks to use loan programs offered by the Small Business Administration or the U.S. Department of Agriculture, for example, to bring more capital into their areas, they said.

Claire Bruce, owner of Sloan + Themis in Cape Girardeau, joined the conversation, commenting on the challenges business owners in the Delta Region face. Bruce opened the jewelry boutique more than two years ago.

"As a business owner, it is sometimes harder to connect with the latest trends in business [than] it would be for someone in [New York], Chicago, or San Francisco," she said. "Luckily, I've been able to connect with people across the country to see how they address their business issues and where they're innovating."

Bruce suggested that showcasing regional companies on the DRA or SBA websites and in promotional materials could build awareness for programs and creative businesses, and network training also would be beneficial.

"And it goes without saying that any opportunities to network within and outside of the region is good," she said.

The number of business licenses issued in Cape Girardeau increased in 2011 and 2012. But last year, 172 business licenses were issued, down from 239 the year before, according to data from Cape Girardeau City Hall.

"We're still going to see that ebb and flow" as businesses choose to merge, close or relocate, said Tim Arbeiter, vice president of community development at the Cape Girardeau Area Chamber of Commerce, in a previous Southeast Missourian interview. But "closures are getting fewer and fewer, which is a good thing."

Data from Cape Girardeau City Hall show only 96 local businesses closed in 2013, the lowest number over the past 10 years.

Some choose to start a business because of lack of employment in their areas, to pursue a dream to be self-employed or because they developed a solution to a problem, Stapleton said.

An upcoming report from the authority about jobs and small businesses found "incredible growth" of small businesses since 2001 in the Delta region, especially those with one to nine employees, Stapleton said.

And more people are taking notice of small companies in the southern region, Bruce said.

"Now is a great time to be in a creative business in the South," she said. "There is a big renaissance in southern design and art going right now. The extra attention is great."

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