Special Coverage: 2022 AX Conference
Obtaining financing has long been a challenge for airport concessions disadvantaged business enterprise (ACDBE) operators in airports. Even pre-COVID, operators were calling on airports to take a more direct role in helping with financing challenges. Now, with those prime partners struggling to put their own balance sheets back in order, airports and small operators likely must find new ways to ensure that small businesses have the opportunity to compete for space and operate successfully. The Airport Experience Conference brought together several professionals to discuss ways to keep ACBDEs in the market and thriving. Moderated by Kimberly Griffin, CEO of DBE Consulting, the panel included Inez Daniels, CEO and founder of Fresher ATL; Everett Sands, CEO of Lendistry; and Bob Silvas, president of Silvy Group.
Griffin began the session by asking Daniels about her perspective on the current landscape as an ACDBE operator. “I think pre-COVID and when I first entered the business it was thought that being in the airport automatically meant that you would be profitable, and that is just not the case today,” Daniels said. “Going forward as ACDBEs, we really have to be strategic, diligent and disciplined with our choices.”
Griffin then asked for Silvas to provide the airport perspective. Silvas noted that a big barrier to proper ACDBE support is that airports view them as simply a box to check in order to meet regulations. “When the airport lets its bar sit at satisfactory then that’s all they’re ever going to achieve—the challenge is to go above satisfactory, to exceed it,” he said, adding that airports must start by understanding the unique challenges ACDBEs face in order to develop ways to overcome them.
He continued by bringing attention to airports that have developed new models to offer ACDBEs a greater chance of success in their spaces. “Des Moines International Airport (DSM), for example, is taking on an operator model where they’ve gone in and done the build out construction and then put out an RFP for a business to come in and operate that center. Removing that capital investment requirement alone is a huge advantage to getting ACDBE participation and getting them into an airport where they have the total experience of operating a concession.” Silvas added that Greenville–Spartanburg International Airport (GSP) and Raleigh–Durham International Airport (RDU) have since followed suit in this approach.
Another approach some airports, including Salt Lake City International Airport (SLC) and Norman Y. Mineta San Jose International Airport (SJC), have taken is to issue loans directly to ACDBEs. Silvas pointed out that airports didn’t introduce these new models with the direct goal of assisting ACDBEs in particular—they were more motivated by COVID changing the overall concessions landscape—but nonetheless it’s ACDBEs that have benefited greatly. “And it’s because these new models addressed one of the biggest barriers ACDBEs face and that’s access to capital.
Griffin next asked Sands to detail other opportunities available to small businesses. The first program he highlighted is the State Small Business Credit Initiative (SSBCI). “As part of the SSBCI, roughly $10 billion will pass to states from the Treasury this April, and that money can be used mainly for three things: One is loan participation, one is loan guarantees, and the other is venture capital,” Sands said. “I think all three fit to benefit ACDBEs. There’s an opportunity there for you all to mobilize and for us to mobilize as lenders to help you get access to that.”
The second program that Sands encouraged the industry to watch closely involves a change being made to the Small Business Investment Company (SBIC) that will allow more deployers of capital to come into the program. “This program is another leveraging opportunity using federal money—quite frankly, you already pay for both of these programs as long as you pay taxes, so you might as well benefit from them,” he said.
Griffin asked Daniels to elaborate on some of the ways small businesses should be navigating the current landscape differently than in the past. “Collaboration is more important than ever, and I think that has been a huge difference that I’ve seen since coming into the business and being in the trenches with COVID,” Daniels said. “Whereas before we worked in silos, this really is an ecosystem and we all need to work together—transparency and open communication are critical. We have to find a path forward so that it’s a win-win for the concessionaire, the airport, the prime, everyone. And if it’s not, as an ACDBE, it needs to be a strong ‘no.’”
Lastly, Sands touched on some of the efforts Lendistry has made to address the systemic issues surrounding credit and policies that prohibit underserved communities from gaining access to capital. “We asked Congress to change the federal home loan banking system, we asked for access to the Federal Reserve, and we asked for the Small Business Administration to create more programs that would be beneficial to the industry,” he said. “We spoke to SBA yesterday and we talked to Congress today, and so there’s an expectation that it will move forward. It takes a while for some things to get through, but we’ll get there.”
