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The opportunities for minority entrepreneurs in Detroit to receive funding for their business just increased as Chase has expanded their Minority Loan fund from $6.5 million to $18 million.
The fund, initially started by the W.K. Kellogg Foundation in 2015 with $6.5 million, is jointly run by JPMorgan Chase and the Detroit Development Fund was developed as part of JPMorgan’s commitment to invest $150 million in the Motor City’s economy to help it recover from the financial meltdown of 2008. It is managed and facilitated by the Detroit Development Fund (DDF) and as of December 2017 has so far already earmarked or lent $4.5 million to more than 43 minority small businesses. According to DDF’s webpage “the EOC is a source of business capital for Detroit businesses owned by entrepreneurs of color and businesses that primarily hire people of color.”
Business owners can apply for loans ranging from $50,000 to $150,000 which can be used to expand their business, buy equipment, establish contractor lines of credit and address short-term cash flow needs. In addition to getting much needed loan funds, recipients also receive access business assistance in accounting, marketing and other services. According to Fortune, the EOC Fund is designed to address a Catch 22 that renders many small minority businesses “unbankable”. Many of those businesses can’t overcome the hardline rules and regulations traditional financial institutions require to obtain loan funds to start or grow their business, especially in economically depressed areas. To combat the traditional ways of doing business JPMorgan Chase teamed up with community based development groups that aren’t bound by the same lending restrictions such as the Detroit Development Fund.
At the heart of the push is community. “The Kellogg Foundation developed and initiated this fund to dramatically change the wealth trajectory of people of color in the city and its neighborhood”, said LaJune Montgomery Tabron, President and CEO of the Kellogg Foundation in an interview with JPMorgan Chase. To date, there are more than 50,000 minority owned small businesses in Detroit and “according to the JPMorgan Chase Institute, spending at Detroit small businesses has grown significantly – from down over 4 percent in early 2014 to up 4 percent in mid-2016. Nearly six in ten (58 percent) of consumer spending took place at small businesses in the city, which is 20 percentage points higher than the average small business spend across 14 other major U.S. cities” states the article issued by JPMorgan Chase & Company.
The fund is working hard to meet the growing demand for capital to assist Detroit in its ascension from the proverbial ashes. New funders such as Fifth Third Bank, the Kresge Foundation and The Ralph C. Wilson, Jr. Foundation have all made sizeable investments or guarantees to the fund. These firm investments and strong commitments are expected to encourage other investors to financially support the fund in the future.
Because the program has worked well and offered many learning opportunities that have been worked thru, similar programs are scheduled to launch in San Francisco and the South Bronx later in 2018.
Anyone in the Detroit area interested in applying for a loan can start here. Any persons/businesses interested in investing capital to grow the fund can call (313) 784-9547.
Have you successfully applied for small business loans from conventional banks or loan funds or both? How did the process differ? What did you learn going through the process?