JPMorgan Chase, Detroit Development Fund and the W.K. Kellogg Foundation Announce $6.5 Million Loan Fund for Detroit's Minority-Owned Small Businesses
Facilitated by DDF, a Michigan 501(c)3 Community Development Financial Institution (CDFI), the Fund will seek to provide financing for general contractors, small retailers and other neighborhood service businesses along with many other types of businesses. The Fund will help businesses that traditionally have lower credit quality, lack access to capital and staffing and primarily serve Detroit's neighborhoods.
Small businesses have historically been at the heart of economic growth in Detroit, and they have the potential to reduce unemployment and expand opportunity for Detroiters. There are approximately 32,000 minority-owned small businesses in Detroit, according the U.S. Census. This ranks Detroit as the fourth largest U.S. city for the number of minority-owned businesses. Yet, despite their importance to the economy, recent research by Michael S. Barr, Professor of Law at the University of Michigan, says minority-owned businesses rely significantly more on investments of personal or family wealth than on outside debt or equity.
"For Detroit's comeback to be a true success, there must be opportunity for the Detroiters who have stayed," said Detroit Mayor Mike Duggan. "This new program fits perfectly with the work my administration is doing with Ken Harris and the Michigan Black Chamber of Commerce to make sure Detroit residents who want to start a business in their city have access to the capital and support they need to be successful."
"The Entrepreneurs of Color Fund is very exciting for us and the Detroit small businesses it will support," said Ray Waters, President, DDF. "The unique structure of the Fund allows DDF to provide a variety of lines of credit and loans to accommodate the needs of entrepreneurs of color. "We are pleased to facilitate the pilot program and are grateful for the support of JPMorgan Chase and the W.K. Kellogg Foundation. We look forward to growing our lending in minority communities."
Through a \\$3.5 million grant provided by the JPMorgan Chase Foundation, as part of its \\$100 million commitment to the Detroit's economic recovery, and \\$3 million in program-related investments from the Kellogg Foundation, the Entrepreneurs of Color Fund will provide short and long-term loans. Loan sizes will vary, but the average loan will range from \\$50,000 to \\$150,000. The Kellogg Foundation developed and initiated the Fund because of its long-standing commitment to equity and to Detroit.
Businesses receiving financing will be able to use the capital to expand, finance equipment, address short-term cash flow needs and provide contractor lines of credit. The Fund will also provide small business loan recipients with technical assistance such as networking, marketing, business plan development and cash flow management. Eligible small businesses must be majority owned by people of color or have more than half their workforce made up of people of color. During implementation of this initiative, DDF will also work with Max M. & Marjorie S. Fisher Foundation's Detroit entrepreneurship programming efforts.
"Neighborhood businesses are critical to Detroit's comeback, but many need access to the right capital to grow and thrive," said Janis Bowdler, Head of Community Development for Global Philanthropy, JPMorgan Chase. "The Entrepreneurs of Color Fund is a unique approach that combines flexible financing and services to strengthen continued business growth in Detroit's neighborhoods."
"The Kellogg Foundation is not new to the idea of creating access to capital for people of color," said La June Montgomery Tabron, WKKF's President and CEO. "We know that investment in people of color is essential for equitable and effective urban development and this nation's sustained economic dominance. We are proud partners with Detroit Development Fund, JPMorgan Chase and others who will join us to improve the economic opportunities for entrepreneurs, who are also parents, to better support their families and ensure success for Detroit's kids."
Funding will allow the Entrepreneurs of Color Fund to provide loans and technical assistance and establish a loan loss reserve. The reserve will allow DDF to expand its lending criteria and help Detroit small businesses that traditionally did not qualify for a loan.
"Detroit's strength has always come from entrepreneurs who have a great idea and can build that into a business that thrives and creates jobs," said U.S. Senator Debbie Stabenow. "This new public-private partnership will help business owners succeed and grow, creating jobs and opportunity across the region."
Michael Barr's recent research, Minority and Women Entrepreneurs: Building Capital, Network, and Skills, published by the Hamilton Project of the Brookings Institution, calls for greater support for minority-owned and female-owned small businesses.
"Minority-owned businesses, including those in Detroit, often lack access to credit, to essential skills needed to survive and grow, and to business networks for mentoring and new business opportunities," said Michael S. Barr, Professor of Law at the University of Michigan. "Increasing business formation by minority and female entrepreneurs is critical to improving the rate of entrepreneurship for the country as a whole, and generating new growth and jobs."
Interested Detroit small businesses can learn more about eligibility by contacting the Detroit Development Fund at (313) 784-9547 or vholsey@detroitdevelopmentfund.com.
About the Detroit Development Fund
DDF was established in 1996 with a mission to "improve the quality of life for residents in underserved Detroit neighborhoods." A 501(c)(3) and certified as a CDFI, DDF provides term loans and lines of credit to small businesses, small contractors, and for-profit and nonprofit affordable housing developers. DDF currently manages \\$23 million in loan capital. Since lending activities began in 2002, DDF has closed over \\$36 million in loans to businesses in Detroit, which helped to retain approximately 1,200 jobs and created approximately 1,800 new jobs. Approximately 72 percent of DDF's small business loans have been made to minority owned companies, and over 1,400 housing units were rehabbed as a result of DDF's loans. DDF lending activities have leveraged over \\$200 million in public/private investments with more than \\$7 million in projects under management.
About JPMorgan Chase & Co.
JPMorgan Chase & Co. (NYSE: JPM) is a leading global financial services firm with assets of \\$2.4 trillion and operations worldwide. The Firm is a leader in investment banking, financial services for consumers and small businesses, commercial banking, financial transaction processing, and asset management. A component of the Dow Jones Industrial Average, JPMorgan Chase & Co. serves millions of consumers in the United States and many of the world's most prominent corporate, institutional and government clients under its J.P. Morgan and Chase brands. The firm uses its global resources, expertise, insights and scale to address some of the most urgent challenges facing communities around the world including the need for increased economic opportunity. Information about JPMorgan Chase & Co. is available at www.jpmorganchase.com.
About the W.K. Kellogg Foundation
The W.K. Kellogg Foundation (WKKF), founded in 1930 as an independent, private foundation by breakfast cereal pioneer Will Keith Kellogg, is among the largest philanthropic foundations in the United States. Guided by the belief that all children should have an equal opportunity to thrive, WKKF works with communities to create conditions for vulnerable children so they can realize their full potential in school, work and life. The Kellogg Foundation is based in Battle Creek, Michigan, and works throughout the United States and internationally, as well as with sovereign tribes. Special emphasis is paid to priority places where there are high concentrations of poverty and where children face significant barriers to success. WKKF priority places in the U.S. are in Michigan, Mississippi, New Mexico and New Orleans; and internationally, are in Mexico and Haiti. To learn more, visit www.wkkf.org or follow WKKF on Twitter at @wk_kellogg_fdn.
Media Contacts:
Detroit Development Fund: Ray Waters, President of Detroit Development Fund,
rwaters@detroitdevelopmentfund.com, 313.784.9567.
JPMorgan Chase: Steve O'Halloran, steve.ohalloran@chase.com, 302.282.5699
W.K. Kellogg Foundation: Dana Linnane, dana.linnane@wkkf.org, 269.969.2301
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