Striving to impact lives
Covington help put business infrastructure into place
As director of the MDA’s Minority and Small Business Development Division, Columbus native Bob Covington is responsible for developing and implementing plans that assist minority and women-owned businesses throughout Mississippi. He sat down recently with the Mississippi Business Journal’s Nash Nunnery for a conversation about the division’s programs and how the economy has affected minority business start-ups.
Q — What role does the Mississippi Development Authority (MDA) play in helping minority and women-owned businesses in our state?
A — Through its Minority and Small Business Development Division, MDA strives to impact the lives of every Mississippian by providing access to business opportunities, training, capacity-building and networking. The division provides technical business assistance and serves as an advocate and strategic partner for minority and women-owned businesses in the state. Also, we are strategically partnered with the Mississippi Procurement Technical Assistance Center whose mission is to enhance national defense and economic development of the state by assisting Mississippi businesses in obtaining federal, state and local government contracts.
Q — As director of the agency’s Minority and Small Business Development Division, what are your responsibilities and goals?
A — My responsibilities are consistent with the overall directives of MDA as being engaged in providing services to businesses, communities and individuals in Mississippi. My goals are to take the MDA message to all areas of the state. There are many small business support programs that are relatively unknown in various regions. We plan to reach those areas by all means available to us. Helping businesses to build capacity is another area that we address through programs such as our Model Contractor Development Program. For others, we provide targeted free basic business training for emerging businesses that have the technical expertise but lack the basic business infrastructure to compete. Building capacity and providing access are our main objectives.
Q — What factors are to be considered by an individual who wishes to launch their own small business?
A — There are numerous factors to consider before you toss your hat into the entrepreneurship ring. Before listing those that most developers consider crucial, my advice to anyone that has a great idea and are considering entrepreneurship is to get professional business counseling. There are many reputable private business consultants and experts that provide business development counseling, but this support is also available through local, state and federal agencies free of charge.
Key factors to consider are (1) your experience (2) the market (3) the economy (4) financing options (5) personal time factor (6) individual stress and (7) having a fall back position. After one examines those key factors, then it’s possible to proceed with the basics such as writing a business plan, selecting an accountant, seeking legal advice, selecting a business name, registering with your state and local government, determining your insurance needs, setting up business banking account, signing agreements, selecting employees, etc.
Q — Please explain to our readers about the MDA’s Minority Business Micro Loan program?
A — The program is a small project funding source for qualified certified minority and women-owned businesses. The funding level ranges from $2000 to $35,000 and requires an owner’s equity injection as low as 5 percent. Loan proceeds must be adequately secured with terms not to exceed seven years. The interest rate is fixed at four percentage points above the discount rate as provided daily by the Federal Reserve.
Q — What are the nuts-and-bolts of the Minority Business Enterprise Loan program?
A — The Minority Business Enterprise Loan Program seeks to combine state and private lending sources to assist new and existing minority businesses in gaining access to needed capital in the form of direct low interest loans. It is available to qualified certified minority and women-owned businesses up to a maximum of $250,000 or 50 percent of the total project cost, whichever is less. Each year approximately $3 million are processed through this program to eligible Mississippi businesses. The terms of the loan are a maximum of seven years for working capital, ten years for machinery and equipment, and fifteen years for land and buildings. The interest rate on the MBEL is 2 percent above the discount rate down to a minimum of 2 percent below the discount rate. Loan proceeds may not be used for debt consolidation or to finance real estate held primarily for sale or investment.
Q — How has the poor economic climate affected minority and women-owned business start-ups in Mississippi?
A — For all businesses the weak economy has obviously reduced the potential market as consumers reduce their basic consumption and drastically cut back on their discretionary spending. However, due to employee displacements, many are turning to themselves and their experiences and are seeking counseling on starting their own businesses. Our offices are experiencing an increase in inquiries as well as attendance to our sponsored events. Feedback results gathered from our clients indicate that money continues to be tight as lenders become more risk averse. Still, we will continue to provide the assistance and resources that we have available for those desiring to start their own businesses. We believe that through our business assistance and training program we will have positioned a group of emerging entrepreneurs that will surface when the economy rebounds.
Q — The MDA’s Minority and Small Business Development Division has had some remarkable success stories. Please share a couple with our readers.
A — (1) A construction company out of Meridian, Miss., had no bonding capacity just a few years ago. However, after attending MDA’s first Model Contractor Development Program, today that company is bondable for up to $1 million.
(2) A safety equipment company that started in Jackson, Miss., in 2007 after its owner left the military and eschewed several lucrative offers elsewhere has a client list that includes Toyota, L-3 Vertex and Mercedes Benz. The company’s sales totaled almost $1 million in just two short years.
Q — Since assuming the reins as division director, what have been your greatest challenges?
A — Of course, given our current economic climate, we must begin to think outside of the box. Even though we are experiencing budget reductions, our team must remain positive and continue our focus on helping to change the lives of all needing our assistance. Our challenge is to provide value and reduce waste. The services that we provide are needed now more than ever, so we must get more done with less. We will do this by working smarter and working together.
Degree(s): BS; MBA; MS
Hobbies/Interests: Instrumental music/world events
Favorite Food: Almost any seafood dish
Favorite Movie: “The Godfather”
Favorite Color: Blue
Last book read: “No Apology: The Case for American Greatness”