After more than two decades as President and CEO of FSC First, Shelly Gross-Wade recently announced her end-of-year retirement. Shelly has over 35 years of executive-level management experience in economic development finance. Her career includes a 46-year tenure as a public servant, advocate, and financial leader, during which she blazed a trail for improved access to capital for small, minority, and socially disadvantaged businesses throughout the State of Maryland.
She was the first African American and woman to lead FSC First and is a member of a distinguished group of African American-led Community Development Financial Institutions (CDFIs) in the State of Maryland and the United States. Her career contributions have significantly impacted economic development initiatives within the region.
Below, Shelly reflects on her career, her time with FSC First, and her upcoming departure.
What would you like stakeholders, partners, and borrowers to understand about your transition from FSC First?
FSC First has experienced an evolution that is undeniably reflective of our efforts to respond to the growing and diverse needs of our community. I am proud to have the support of our stakeholders, partners, and borrowers as we have attracted the highest level of funding support to expand our creative approaches to program development and delivery. Our business owners have the most improved access to capital in the history of FSC First. That is because of the solid relationships we have with our stakeholders and partners who share in our mission to provide access to innovative and creative financing solutions for small and minority-owned businesses.
Our stakeholders and partners invest in and join FSC First to be the preferred solution in some of the day-to-day challenges that face our businesses – regardless of whether they need access to capital, assistance with additional commercial, industrial, or retail space, access to a qualified and trained workforce, access to professional services (e.g., accountants, lawyers, insurance brokers, etc.), acquisition of machinery and equipment, or access to new markets for their expansion purposes.
Throughout your tenure at FSC First, you’ve been an advocate for small, underrepresented businesses. From forging public-private program development for over three decades to presenting to the U.S. Senate Committee on Small Business & Entrepreneurship at the invitation of Senator Ben Cardin, you have championed small business lending from the start. Why was this important to you?
My passion for championing access to capital for small and underrepresented businesses evolved because of my earlier years in economic development. I was responsible for business development and outreach in the 80s, and during that time, it became obvious to me that the businesses that have the greatest potential to support our residents with quality jobs, products, and services also had a lack of awareness and the least amount of access to the resources they need to be sustainable. I assumed responsibility for being their voice when I have access to decision-makers and policymakers. I have made it my purpose and mission to reduce the barriers that impede small and underrepresented businesses’ ability to be competitive – the primary concern being lack of access to affordable capital for their day-to-day operations.
I’ve embraced the position that we can be part of the challenge or part of the solution. At FSC First, I worked diligently to ensure that our nimble organization was and remains part of the solution. That requires a constant focus on the voice of the community we serve and an innovative approach to devising the solutions. Therefore, FSC First either developed and implemented new loan programs or sought to manage other people’s programs that were designed to serve our preferred businesses.
Also, being accessible to businesses seeking public and private financing for their operations, gave us first-hand knowledge of the personal and operational challenges that prevented them from being bankable. We sought to meet them where they are and bring to them management, technical assistance, mentoring, and coaching, thus serving as a one-stop shop for the most impacted business owners. As a result, FSC First provides comprehensive and customized wrap-around services to business owners that employ one employee or up to 500 employees.
We are uniquely qualified to finance them with direct loans or direct them to the most appropriate lender – depending on their unique circumstances.
Having this first-hand knowledge about the diverse needs of our business owners strategically positioned me to be a trusted advisor to our local/state elected/appointed officials and our congressional leaders to influence their legislative and public policy initiatives.
How have you seen small business lending change throughout your time at FSC First?
While at FSC First, small business lending has changed to be more flexible. We currently have, under management, twelve different loan programs – and they are uniquely designed to complement each other. This level of diversity in solutions allows FSC First to assume more risk than a traditional lender and be more creative in the capital/debt stack to fulfill the customized financing needs of a business.
Unlike a traditional lender, FSC First (as a designated CDFI) is not a credit-score lender, but we place greater reliance on the repayment ability of the business, significant reliance on their revenue and cash flow projections, their owner’s knowledge of and experience in the market/industry they represent, and prefer that their business employees, product or service, and location meets a specific public policy goal for our community.
Also, having access to a diverse financing toolbox means that we can reduce the exposure of traditional banks by being a participating lender with them, thus mitigating some of the perceived risks associated with lending to underrepresented businesses.
This model has worked to our advantage as our loan portfolio has a greater than 90% current ratio. In other words, less than 10% of our businesses are delinquent in repayment of their FSC First direct loans.
How do you believe your time at FSC First was influenced by being one of the few female Black/African American CEOs of a Community Development Financial Institutions in the United States? What do you hope your legacy will be?
Being a Black/African American CEO of a CDFI has allowed me to relate to some of the challenges our business owners face. That has afforded me the opportunity to influence policies and decisions that evolve from understanding people’s circumstances and not judging them individually. It has also presented challenges that some would deem insurmountable. But I have learned through experience that an emphatic “NO” simply means looking for the next opportunity. So, I seize the next opportunity to approach the lender or policymaker, stakeholder, or partner, to influence their decision to be more supportive of our mission.
I hope my legacy will be this: 24 years ago, I came to FSC First and adopted a budget of less than $130,000 and a loan portfolio that included substantial defaults. I grew it to a $2.6 million operation with more than $60 million in grants and outstanding loan balances, with a default rate of less than 10%. I relentlessly pursued individuals who believed in our mission to serve on our Board of Directors and Loan Review Committee, and to volunteer in various capacities – many of whom remain stakeholders and partners today. I know my legacy will be that thousands of businesses have sustained their operations because they walked through the doors of FSC First and received sage advice, guidance, and direct loans that no one else was willing to provide to them. I am proud that I could reach back and bring them on board as Board Members or other volunteers. I believe my legacy will be that I have consistently been a strong advocate for small, minority, and women-owned businesses that didn’t know their voice could make a difference. As an advocate for these businesses, I have grown our financing toolbox from two financing programs to a dozen to ensure that we can provide diverse solutions to their growing financing needs.
My legacy will reflect that I have grown the organization from one person to a twelve-employee team comprised of uniquely qualified economic development finance professionals and created a culture of diversity and inclusion, representative of the community we serve. Our volunteers are selected from the same lens of diversity and inclusion and must demonstrate a level of compassion and understanding for the circumstances of our applicants, borrowers, and clients, and not judge them because of them. It is imperative that we maintain a posture of assistance and exhaust all means of being a solution. In that regard, FSC First is truly more than a lender.
What do you hope for the future of FSC First?
I am hopeful that FSC First will remain an organization that is essential for the growth and sustainability of businesses owned and operated by black and indigenous people of color (BIPOC), and that our financing toolbox is expanded to include equity investments to businesses that represent innovation and inclusion. FSC First is unique in its current designations – serving as both an SBA CDC/504 lender as well as a Treasury designated CDFI. These designations can be leveraged to attract more stakeholders, partners, and investors to achieve our strategic mission. We are an anomaly in our space and have the authority to make direct loans from $50,000 to $5.5 million. By providing wrap-around technical assistance, business acumen training, coaching, and mentoring, we are positioned to scale up and assist more businesses. Finally, I hope that FSC First remains valued as a strategic partner in the local economic development strategy and gains increased visibility because of the impact it is making in the State of Maryland as well as the Washington DC Metropolitan Area. I believe we will remain a best practice model for non-traditional financing for small and underrepresented businesses.