Home » MBJ FEATURE » Broadband legislation could prove timely to rural small businesses

Broadband legislation could prove timely to rural small businesses

By TED CARTER

Judd Wilson

David Chase

The director of national outreach for the Small Business Majority left Mississippi last year having compiled a lengthy list of the challenges the state’s rural small businesses face. Atop the list: An absence of broadband internet service and spotty cellular phone service.

That broadband problem could ease, however, in the months ahead now that the state’s rural electric co-ops have the green light to own  broadband systems and operate them themselves or through affiliates. The promise of change came via House Bill 366 sponsored by Republican House Speaker Philip Gunn of Clinton and Democrat Rep. Steve Holland of Tupelo and gained Gov. Phil Bryant’s signature in early February.

The measure addresses an issue listed as a top concern in roundtable discussions and focus groups Washington, D.C.-based Small Business Majority held in Mississippi in compiling data and information for its newly issued report,  “Examining the Unique Opportunities and Challenges Facing Rural Small Businesses.”

The report came from lengthy discussions with rural business owners and support officials in Mississippi, Georgia, Texas ad New Mexico, followed by a national survey of small business owners.

“We definitely saw that broadband access was a challenge in some communities in Mississippi,” said Small Business Majority outreach director David Chase in an interview.

“In some areas you couldn’t get cell phone,” he said. “They were really cut off.”

Even if a rural business manages to secure broadband for itself, customers who do businesses with it too often have no internet service, Chase said.

And if the businesses don’t have it, they can’t have digital communications with either customers or suppliers, Chase noted.

The Small Business Majority said in its report that owners of rural Mississippi small businesses would welcome help with telecommunications infrastructure. The owners urged state and local governments to create state grants or tax incentives for big providers such as Comcast or Verizon.  More regulatory reforms like HB 366 could promote broadband construction, they said.

While Mississippi legislators addressed broadband this session, the state’s rural small businesses would also like lawmakers to turn their attention to other pressing problems such as financing options, health-care coverage and workforce-development and retention.

A number of things can be done, according to Chase, referring to help on the education and resources side. “Access to capital is also a major issue,” he said. “Traditional banks are not lending to small businesses in these areas.”

One reason, Chase said, is the businesses want to borrow small amounts. “Twenty-five thousand to $50,000 is not worth their time to go through the process of writing the loans.”

Help is scarce, and Chase laments that when it is available, it is too often something the typical small-business owner does not know how to access. “There is no infrastructure out there in place to educate and inform them about options,” he said.

“No one is guiding them in the process.”

That’s not entirely so, said Judd Wilson, senior vice president of the Tupelo Chamber of Commerce and director of the Renasant Center for IDEAS, Tupelo/Lee County’s regional business incubator.

“I don’t disagree with the report one iota,” Wilson said in an interview. “These are problems that are out there.”

Wilson, who worked with the Small Business Majority to organize its focus groups, said that in the dozen years since inception of the Renasant Center for IDEAS, many bankers in the region have begun sending small-business loan seekers to the Center to help make them more viable loan candidates. “Now we have banks calling us and saying, ‘Help this person out,’” Wilson said.

This happens because they see a viable product or service and an entrepreneur who needs help with a business model, Wilson said.

Bankers expect that loan candidates who get mentoring from the Tupelo/Lee County  Community Development Foundation will build a firmer basis for success, according to Wilson.

Chase, meanwhile, said he worries that difficulty getting conventional business financing has caused start-up entrepreneurs and small-business owners to tap into “predatory” online financing.

These loans “are sort of like payday loans,” Chase said, referring to small-dollar consumer loans carrying very high interest and the potential for financial ruin.

Roundtable and focus group participants in Mississippi say cyber loan transactions could be a boon for rural small businesses – if done responsibly and fairly.

“New online platforms that offer responsible lending options could help close the funding gap for these entrepreneurs, assuming issues related to broadband access among rural residents are also addressed,” authors of the Small Business Majority report said.

“Local and state governments can help facilitate safe, responsible online loan options,” the report added.

Chase said the quest for more conventional business financing “is sort of like a chicken-and-egg situation. Lenders can be reluctant to lend” if the loan seeker can’t show a customer base.

“These are things start-ups aren’t likely to have.”

The 14-year-old Small Business Majority has a national entrepreneurial program it wants to spin off to focus on unique challenges in rural communities, according to Chase.

“We didn’t dive deep enough in these communities,” he conceded, and added his organization hopes to develop a “small-business eco system mapping.”

The idea, Chase added, is to look at business support groups and what they are really doing, whom they are serving, and what kind of services they are offering.

After its fact-finding in Mississippi, Georgia, Texas and New Mexico and national survey, the small business advocacy organization concluded entrepreneurs in rural regions have a lot of potential for success but are too often unnoticed, Chase said.

“We definitely felt that some of the communities we visited have been overlooked and ignored for too long,” he said.

“There are a lot of unique challenges they are facing, but also a lot of potential. We feel strongly that entrepreneurs in these communities — when armed with the tools and policies they need – can succeed.”

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