Koreatown : Merchants Flounder Without Loans
A program to help merchants re-establish businesses destroyed or damaged during the 1992 riots and open new enterprises is working with more than 100 clients, staff members say, but most cannot get government or commercial loans large enough to rebuild or convert their businesses.
The Alliance for Neighborhood Economic Development, administered by the Korean Youth and Community Center, is working with 118 clients, most of whom are Korean American or Latino.
The program can count among its successes the opening of a self-service laundry, a mini-mall with five new businesses and a garment shop, said general manager Pat Wong. By the end of its first year of operation, the program’s free technical assistance will have contributed to at least 18 new or expanded businesses, she said.
But most of the merchants still need a $50,000 to $300,000 loan and conventional lending institutions have been unwilling to provide capital, said Sun M. Chung, a staff member with the program.
For example, Si-Yong Kim’s market at El Segundo Boulevard and San Pedro Street burned down on the first night of the riots, but his insurance company reneged on his policy.
The Small Business Administration approved a $407,000 loan package for Kim. But when he told the SBA he wanted to relocate to Kern County, the SBA reduced his loan to $250,000, he said.
Kim has scoured business listings in the classified ads for a business that can provide enough income to cover his mounting debts but can’t find one he can afford with his reduced loan. Since Kim’s equity went up in smoke during the riots, banks see him as a risky loan candidate, Chung said.
“Before I came here I thought America was a good country,” said Kim, a 59-year-old father of two. “Now . . . .”
His voice trailed off and he shook his head.
“I’m a Christian and my minister tells me that I shouldn’t buy a liquor store. But now I’m broke and I have to look for anything.”
Sharon Im, an alliance staff member, said the program does not have the financial or investigative resources to provide sufficient loans, compile economic analyses and statistics or research every possible alternative for all the displaced merchants.
Im sees a lack of commitment from the city and banks to address the rebuilding issues faced by riot victims. “Banks need more flexible lending guidelines because they won’t finance these people,” she said. “The banks see them as risky loans, but their credit was fine before the riots, before they had to take on a debt through no fault of their own.”
Chung put it this way: “If you take all the Korean merchants together (with an estimated $400 million in damages) it’s like a major corporation was destroyed overnight. People talk about trying to keep big companies from leaving Los Angeles, but (with those who have yet to rebuild) it’s like a huge company just left. Where’s the city’s response?”
The city and county funded the Alliance for Neighborhood Economic Development with $250,000, but those funds expire in June, Im said. A separate foundation grant will fund a wrap-up study through December.
Information: Alliance for Neighborhood Economic Development at (213) 365-7400.
