Victor Hugo famously said, “There is only one thing stronger than all the armies of the world, an idea whose time has come.” Novant Health Supplier Diversity & Performance Senior Director Kevin Price, had just such an idea and he launched it at the beginning of this year.
“I started out as a banker at the Mechanics and Farmers Bank, a minority-owned bank. And when I was there, I wanted Novant to deposit a million dollars. That would have been great and I would have hit my goal for the year. Instead, Novant asked me to join the company and start their diversity supplier program back in 2006,” he says. “When I got to Novant, I still wanted to make good on that deposit. But the amount exceeded the [Federal Deposit Insurance Corporation] insurance levels. I would never put the hospital’s money in jeopardy, but I knew about a federal program called CDARS, the Certificate of Deposit Account Registry Service. That program allows corporations to make large deposits in community banks without risking the money. It’s a program to help small, rural communities and their banks. But it can also help with diversity.”
Price used CDARS to convince Novant to deposit $1 million in the bank. Then, something surprising happened.
“What we found were the interest rates were so great—very competitive with large, national banks—that we increased it to $5 million. My CFO loved the rates so much, in fact, that he increased it at the end of last year to $10 million. But the bank president called me and said, ‘I love this deposit, but now it’s a liability for me. I’ve got to figure out how to loan this money.’ So, I told him I had an idea. I said, ‘Let’s take half of that deposit—5 million—and put it at risk as a loan guarantee for minority-, women-, and veteran-owned companies that Novant does business with—our suppliers.’ I know our suppliers, so they’re already vetted. And many of them have been through our Healthcare Supplier Diversity Alliance program (Novant’s program to train and mentor minority suppliers), where they receive business training from Dartmouth’s Tuck School of Business. Who better to take a risk on than those suppliers in our supply chain?” explains Price.
The banker eagerly agreed. Thus, Price created the Novant Loan-Guarantee Program. And there is critical need for it. Price points out that while the economy is booming, many small businesses—particularly minority-, women-, and veteran-owned find it extremely difficult to obtain business loans. If they can obtain loans, they’re often at usurious rates. Price wanted to change that, and he did.
“So far we’ve gotten one company through the process, and he’s got a fascinating story. He came to the country without speaking [any] English. And he only had $100 to his name. Now, he owns a janitorial firm. We gave him his start doing corporate work. Now, we’ve helped him get a loan and we also sent him to Tuck and he learned how to grow and manage his business better. He’s taken full advantage of what we’ve been able to offer him in terms of financing and guidance,” he shared.
Though Price proceeds with the caution of a banker, the actual banker could not be more excited about the program and wants to increase volume—he, too, wants to add more companies to the program. But, he wants to ensure that everything is done properly.
“People were worried that the bank would raise interest rates. But part of our loan guarantee is that rates for our program be prime + 1%, the going rate for anyone else. We’re doing this to help the minority business community and that, in turn, helps the community at large, who also happen to be our customers at the hospital. So, it comes full circle,” he says.
Price also acknowledges his great fortune of being located in Charlotte, North Carolina, the “second banking capital of the country.” He believes Novant’s program could be the start of something big.
“Though we’ve only done one company so far, [we have] several others in the pipeline. It’s taken longer than I expected to get it off the ground, but we have the model and the structure set now. So, it will get faster the more we do it. I could easily see there being a $50 million fund happening here in Charlotte to help minority businesses.
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