Regina Fleming Photography
By Glenda Cadogan
The Problem Solver with a Focus on Small Businesses
A financial institution and a college—Carver Federal Saving Bank and Medgar Evers College (MEC), their missions intersect at critical points, especially in the area of economic empowerment for communities of color. So, it was a seminal moment when President Dr. Patricia Ramsey conferred the coveted honorary Doctor of Humane Letters degree on Michael T. Pugh, president and CEO of Carver Federal Savings Bank, the largest African Americanoperated bank in the United States. “It was an honor for me to be recognized by such an historic institution in our community with footprints across the country,” said Pugh. Admitting that “Dr. Pugh” has a nice rhythm to it and makes him smile, he quickly added that he is careful not to take himself too seriously. And on the off chance that he does, he is quickly brought back to balance when he arrives home and his list of household responsibilities is unchanged.
Last year, with the onset of the COVID-19 pandemic, Carver positioned itself as financial first responders for the communities it serves. “We have seen a significant amount of small businesses negatively impacted by the pandemic,” Pugh said. “Reports show that 41 percent of Black and Brown businesses will, or have closed as a result of this crisis.” According to Pugh, however, a larger systemic issue is that women are the fastest growing segment of entrepreneurs in the country and Black women come second among them.
Yet, MWBEs are the last in income generation from their businesses. “If you couple these two critical points, what it says is that our businesses have been and are starved for capital and struggle to navigate through difficult times because of that shortfall.” It is said, “When times get tough, the tough get going.” In this pandemic era, Carver Bank has been going the distance for communities of color as evidenced by its participation in the Federal Payroll Protection Program (PPP). Keeping true to his reputation as chief problem solver, Pugh marshaled his team to create unique opportunities for the communities they serve. “We feel it’s our responsibility as not just a financial institution but a US designated community development institution—to help small businesses in terms of access to capital and resources.”
As “financial first responders” Carver put in place robust partnerships such as the one with MBE Capital, a minority financial services firm. Together they provided 16,000 payroll protection loans across the country. “We know a significant portion of those loans truly helped women and minority entrepreneurs navigate through this pandemic,” said Pugh. At the local level, partnerships with a woman owned FinTech firm generated and supported $45 million in PPP loans in the greater NYC area. In addition, 5,000 jobs were preserved through the access to capital provided by the bank.
In moving forward, Carver is working and near ready to roll out a loan fund program focusing on small business owners. One of the key components of this program looks for ways to support small businesses without relying completely on traditional credit scoring. “We know that 40 million Americans have no credit or an insufficient credit score to qualify for traditional bank financing. However, the FICO does not necessarily speak to the character of the borrower. I think there is a real way to develop this program to provide small business loans at a local level in the areas of our branches in Harlem, Brooklyn, and Queens,” Pugh explained. This program should be up and running in the next few months.
To fully appreciate the Carver mission, it’s important to take a peek into the history of the institution that started back in 1948. Not only was the prevailing culture at the time one of, “if you’re Black, stay back,” it was doubly so when it came to borrowing from financial institutions. Your skin color trumped the size of your bank account no matter how much it was and the big banks weren’t lending money to anyone in Harlem, even the middle class. The need for home and business loans was real, however. Instead of rolling over, some local civic leaders, entrepreneurs, and faith leaders came together and formed their own bank. Named for contemporary era scientist George Washington Carver, the first branch opened in Harlem in 1949.
Today, with seven branches located in Harlem, Brooklyn, and Queens, Carver continues its laser focus on minority and women-owned businesses and champions their growth and sustainability. In addition to the brick-and-mortar branches, Carver has account opening capacity through Carverbank.com in nine states from Massachusetts to Virginia. With an asset base of $620 million, Carver has earned its label as a community development financial institution (CDFI)—a designation made by the US Department of Treasury that requires at least 60 percent of every dollar on deposit be reinvested in the community served. “I am proud that at Carver we have exceeded this minimum requirement and today 80 cents of every dollar we have in deposits is reinvested in the community,” stated Pugh.
While he is no economist, as a banker with 30 years of experience, Pugh has seen many financial cycles. From that vantage point, he sees a slow but steady recovery for the pandemic. “But Black and Brown businesses will continue to have challenges because the issues for them have not really changed, which is the need for more support and capital. In most cases these small businesses rely heavily on brick and mortar storefronts and do not have the technology to support their businesses,” he explained.
“As a bastion for Black economic empowerment, Carver Bank,” said its president, “will continue to champion the cause of minority and women-owned small businesses. There is no greater place to be than with an organization that stands behind what it believes,” he said. “And we believe in community.”
With a steady increase in customers at branches and on digital platforms, it is clear the community believes in Carver.