Hajji Gobana gets a loan

An ethnic-based community developer challenges the traditions of non-traditional lending

by Evan Reminick

Dec. 5, 2005—Hajji Gobana (profile) opened his corner store on Park and Lake in April 2005, a month before the Lake Street rebuild began. By June construction had surrounded the new business, restricting traffic, eliminating parking and removing the sidewalk outside the door.

Hennepin County and the City of Minneapolis had spent two intense years preparing the community for the inevitable impacts, spreading the word through several direct mailings, dozens of news releases, hundreds of public meetings, a dedicated website and regular discussion of the project by business and neighborhood organizations, elected officials and civic leaders.

Gobana had no idea the disruption to his fledgling business would occur.

Asha Muhammed (left) and Hajji Gobana (center) with Hussein Farah (right). Farah, a business consultant with the African Development Center, helped Gobana secure a cash-flow loan from the Minneapolis Consortium of Community Developers. The loan enabled Gobana's store, Rift Valley Grocery, to stay in business during the reconstruction of Lake Street in Midtown. Muhammed, along with Muna Abdilahi and Muhammed Muhammed (not pictured) are partners with Gobana in the store. Their first purchase with the loan was new grocery stock.

Desperate for help, he was eventually connected via Midtown Community Works to the African Development Center of Minnesota, a two-year-old nonprofit looking after the economic interests of the state’s growing African immigrant community.

Culturally sensitive business consulting

The staff of the ADC saw no irony, felt no perplexity, in Gobana’s situation. Staffed mainly by fellow African refugees, they understood how such important information could have escaped Gobana’s awareness.

“For those of us who follow the news, it’s clear Hajji was not wise to open the store when he did,” said Hussein Farah, a business consultant with the organization. “He did not know important facts, namely that construction would soon begin outside his door. He made a business mistake of poor due diligence, which is a familiar mistake among our clients. Their focus is as yet much narrower than the workings of the local government and road projects. It’s about family and immediate needs, so it’s easy for them to fall into situations like Hajji’s.”

Farah, a Somali native, says Gobana’s situation is hard to understand for those who have not experienced it. He says it’s no mystery that Gobana and fellow Africans seldom qualify for traditional lending to start and support businesses. As a fellow refugee who has worked with many local lenders, Farah works to reconcile these cultural and economic gaps.

“Every day ADC helps with making the leap from immigrant to entrepreneur, from dispossessed refugee to home owner,” said Farah. “People like Hajji have lived through a lot of adversity and sacrificed a great deal just to be here in Minneapolis. When they get here, they sacrifice even more for the benefit of those who were left behind, even as they try to invest in their new country. Now, while Hajji himself may express only gratitude for his American experience and would downplay the disadvantage of coming from a very different culture, ADC exists to understand and overcome the distance between Hajji’s starting point and his objectives.”

For Gobana, that distance grew shorter after the ADC managed his application for a cash-flow loan offered to Lake Street businesses in the construction zone by the Minneapolis Consortium of Community Developers. Gobana’s was the first loan to close under the special program.

New Minnesotans, new approaches to financial services

This non-traditional lending by community nonprofits using public funding – in this case, federal dollars sent to Minneapolis by the Empowerment Zone program – has been a valuable prop to inner-city revitalization.

In the Lake Street corridor and other commercial areas in the Twin Cities, that revitalization has been fueled in large part by immigrant entrepreneurship, a relatively recent phenomenon that post-dates the founding of the city’s many neighborhood-based nonprofits. Started in 2003 to fill gaps in economic resources in the population of “new Minnesotans,” the ADC often finds itself in the position of being a non-traditional advocate even among the non-traditional community developers.

Gobana’s case and most other loans the ADC arranges for its clients through the Minneapolis Consortium involved the major challenge of providing accounting statements and other financial records suitable to qualify for even the more relaxed standards of a nonprofit loan program.

“Like many of our clients, Hajji was not keeping book the way the financial establishment in America expects it to be done,” said Farah. “There was no business plan, no accountant. It was a cash-box business” – meaning the ADC had first to help Gobana upgrade his resources and his paperwork to complete the MCCD loan application begun in August.

A special mandate

This work took time, which for Gobana’s business was in short supply. The construction on Lake Street had hampered access to the store, all but eliminating its chances to attract and retain a customer base. According to figures provided by the ADC, the Rift Valley Grocery was bringing in roughly a quarter of the revenue typical for a Lake Street convenience store. The ADC referred him to an accountant with a specialty in working with immigrants and went to court, along with a representative of MCCD, to stay the landlord’s eviction proceedings.

As the weeks passed and Gobana’s financial situation grew more dire, the ADC strained against MCCD’s application process. Farah implored MCCD to ease its reporting requirements and move up the meeting of its loan committee to hear Gobana’s case.

This tension is typical, says ADC executive director Hussein Samatar. A veteran commercial banker and a former loan consultant for the nonprofit Neighborhood Development Center, Samatar knows the ropes of small-business lending and the reasons for establishing a threshold of reporting and accountability in the application process. Yet, he says, his organization has a mandate to be “strategically impatient” with the norms.

“We at ADC are advocates for the emerging African immigrant business community,” said Samatar. “Hajji Gobana is a role model in this community. He is an otherwise successful and generous Oromean immigrant who many of us know.”

Indeed, Gobana is well established in the United States compared to many African immigrants. He has lived in the area since 1999, has owned a house in the Seward neighborhood of Minneapolis since 2001, has taken English courses, and has completed business development training through the Neighborhood Development Center. He co-owns and operates a successful ethnic grocery on University Ave. in Southeast Minneapolis. He is also involved in community activities, including an all-immigrant soccer team called “10,000 Legs” that he manages.

“Because he is a bright light our community, we at ADC are inspired to provide the help that’s needed,” said Samatar. “ADC would offer him assistance from our own operating funds rather than let time run out on his store, but that is not the goal here. To succeed in serving as many African entrepreneurs as possible, we must respectfully but firmly pressure the routines of the lending community to obtain financing for our clients. MCCD offered the Lake Street loans, and because Hajji’s business qualified for these loans, we felt the proper avenue was through MCCD.”

With loan approval, good fortune

In late September, MCCD approved Gobana to receive a $20,000 cash flow loan, the maximum amount offered through the Lake Street program. The loan closed October 3, eight weeks after the application began.

The infusion of cash came in the nick of time, saving the Rift Valley Grocery from eviction and allowing it to restock its shelves. At nearly the same time as the loan came through, the store gained the ability to process electronic benefits transfers (EBT); the Women, Infants and Children (WIC) food assistance program; and food stamps. These essential sales drivers resulted from applications to the State of Minnesota that also took months to process.

Gobana reports that the store has been doing much better in recent weeks. He has added a coffee machine and stocked his deli case. He plans to invest in a closed-circuit security system to protect his assets, and has arranged for the removal of a pay phone outside the store that has led to vandalism. He says other near-term improvements will include a new sign and a repainted façade. Come spring, he plans to add outdoor dining along Park Ave., wrapped by a skirt fence. To get these improvements done, Gobana says he is planning to tap Fix n’ Paint grant funds available through the Lake Street Council.

“Everything is good,” said Gobana. “We got the loan we needed, the road project has left a very nice place for us to have a store, and we can think again of expanding, not only surviving.”

Moving on

Hussein Farah checks on Gobana once a month as a contingency of the loan. Gobana also must provide quarterly financial statements to ADC.

These steps, along with his awareness of programs like Fix n’ Paint, are the results of Gobana’s journey through Lake Street’s landscape of community resources. Despite the stresses involved for Gobana and his advocates, Hussein Samatar of the ADC says the bottom line is the important one.

“Hajji has kept the store thanks to the Lake Street loan program. That is the important thing going forward.”

Iric Nathanson, MCCD’s financial resources coordinator, agrees with this sentiment. “The tension you get in balancing advocacy and lending is part of community development and is good for community development.”