HARD TIMES IN PACOIMA CULTURAL BARRIERS LIMIT LOAN ACCESS.

Byline: Rachel Uranga Staff Writer

PACOIMA - Just 2 percent of qualifying shops along Van Nuys Boulevard - most of them Latino-owned - are receiving government loans, a rate that threatens to blunt the economic growth of an area just beginning to recover from years of blight, a study released Thursday says.

The study by the Southern California Coro Foundation, a nonprofit leadership training group, said the low loan approval rate is the result of long-standing mistrust of institutions, cultural divides and language barriers.

``It means business won't be able to get new signs and new paint. If they aren't getting approved for the loans, it's going to hurt the pace of growth of the community,'' said Bryant Tan, one of the authors of the report.

The study, sponsored by the Pacoima Chamber of Commerce and the Valley Family Technology Project, surveyed 65 business owners on the stretch of Van Nuys Boulevard between Amboy Avenue and San Fernando Road. While just 2 percent of those surveyed received a loan, only 16 percent had even applied.

Millions of dollars in financial assistance is available through the federal Small Business Administration and other government agencies. But small-business owners in Pacoima, the San Fernando Valley's poorest neighborhood, are often intimidated by the application process, the study found.

Francisco Barbosa, a Mexican immigrant who runs a bridal shop on Van Nuys Boulevard, said it seemed like many of the government and bank loan programs available were not within the reach of small-business owners like him.

``We don't know how to go in and talk at the bank,'' said Barbosa, who was previously denied a loan.

``We don't have diplomas or credit to develop,'' he said. ``The only ones they know how to help are the rich businesses, the ones with money.''

Like Barbosa, most of the survey respondents spoke Spanish and nearly half did not use computers in their business. Almost 70 percent said they were unaware of government-sponsored financial assistance despite years of concerted effort by groups such as the Valley Economic Development Center to provide business improvement and loan classes.

``It's not a lack of outreach,'' said Roberto Barragan, president of the VEDC, which administers a micro-lending program in Pacoima that provides up to $150,000 in loans annually and contracts with the federal Small Business Administration.

``We are always struggling to find those willing to go through the process to apply for bank loans,'' Barragan said. ``When we recruit businesses, they say, I don't need financing, and they don't want it.''

He said at least half of those applying for loans are rejected because of a poor business plan or no collateral.

Frank Brancale, a spokesman for the U.S. Small Business Administration, which guarantees bank loans for minority borrowers, said there are unlimited funds available from banks hungry to tap into low-income markets.

``There are sometimes cultural problems,'' he acknowledged, adding that many Latin American immigrants are less likely to seek aid from banks, which in their native countries have frozen assets or been taken over by the government.

And while cultural factors have contributed to the low loan approval rating, Barragan said Pacoima has not received the same attention as other poor neighborhoods.

``There hasn't been the state, federal, local support that you see in South Central and in Los Angeles,'' he said.

Pacoima has a per capita income of just $9,133, compared with an average of $22,467 throughout the Valley. But recent efforts by an array of government and nonprofit entities to bolster Pacoima's economic vitality have helped turn around a neighborhood riddled by gang violence and other crime in the 1990s.

A spokesman for Councilman Alex Padilla, who championed a $3 million program to beautify Pacoima's business district, said they had not yet reviewed the study, which was submitted to city officials and businesses.

The study acknowledged the improvements, but stressed the need to improve access to loans. Among other things, it suggested that Pacoima form a Business Improvement District, which can create special taxes within an area to promote growth.

``Streets are cleaner and people feel safer. But large obstacles still remain as stakeholders confront the economic vitality of the area,'' the report said.

Rachel Uranga, [phone]

rachel.uranga(at)dailynews.com

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2 photos, box

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(1 -- 2 -- color) Francisco Barbosa, above, owner of Casa Estrada wedding shop on Van Nuys Boulevard, is one of the many small-business owners who struggle to stay afloat in the current economic climate. Many firms along Van Nuys Boulevard, left, are in the same situation because cultural differences in the area discourage owners from seeking bank and SBA loans.

David Sprague/Staff Photographer

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