Two years ago, JPMorgan Chase made a $100 million, five-year commitment to Detroit’s economic recovery. Additionally, it recently announced the company is expanding its efforts as part of its $100 million to create economic growth through small business expansion, community development, neighborhood stabilization and workforce training.
“Detroit is Exhibit A of what can be accomplished when individuals and organizations put ideological differences aside and work together to reimagine a city, revitalize a community and open doors to opportunity,” said Jamie Dimon, Chairman and CEO, JPMorgan Chase. “JPMorgan Chase is incredibly proud to be working side-by-side with community and city leaders to help this great city continue its comeback. We hope that other cities and national leaders will take note of Detroit’s collaborative approach to fixing problems and learn from it.”
“JPMorgan Chase’s commitment goes above and beyond just writing a check,” said Detroit Mayor Mike Duggan. “From new loan programs for minority-owned small businesses, to research on how we can strengthen job training to help more Detroiters find good-paying jobs, the work JPMorgan Chase is doing to help us tackle our challenges is incredibly appreciated.”
A major part of this commitment is the Entrepreneurs of Color (EOC) initiative which is focused on providing capital access for businesses owned by people of color. Chase is also the sponsor of Detroit Startup Week, which is a week of programs focused on supporting entrepreneurship.
I discussed EOC with Daryl Shore, Vice President, Global Philanthropy, JPMorgan Chase. As Program Officer, Shore is responsible for managing its highly-visible housing and community development portfolio consisting of traditional grants and other flexible capital.
Lee: What is the EOC program and when did it start?
Shore: Launched in September 2015, the EOC Fund addresses the need for greater capital access for Detroit small businesses owned by entrepreneurs of color and businesses that primarily hire people of color. The $6.5MM loan fund, created by The Detroit Development Fund (DDF), JPMorgan Chase & Co. and the W.K. Kellogg Foundation, is boosting economic opportunity for minority-owned small businesses in Detroit by providing them with greater access to loans, allowing them to grow, hire local and further contribute to the city’s recovery.
JPMorgan Chase committed $3.5 million to the fund, as part of the firm’s $100 million commitment to Detroit’s economic recovery. The fund represents a holistic approach to address market barriers and limited capital access that disproportionately affect entrepreneurs and communities of color.
Detroit Development Fund (DDF) – a nonprofit, community development financial institution created to promote economic development for low-to-moderate income residents of Detroit – serves as EOC Fund administrator. The Fund seeks to provide financing for general contractors, small retailers and other neighborhood service businesses along with many other types of businesses that traditionally have lower credit quality, lack access to capital and staffing and primarily serve Detroit’s neighborhoods.
In the role as the fund administrator, DDF provides loans ranging from $50,000-150,000. With an influx of new Detroit economic development projects, such as the M-1 Rail System, and the continued redevelopment and deconstruction of blighted residential and commercial properties, there has been a significant increase in contracting opportunities for entrepreneurs of color and businesses that primarily hire people of color.
Lee: Is it part of a national effort or exclusive to Detroit?
Shore: Small businesses fuel community engagement and job growth throughout the country and we proudly support several programs, like the EOC Fund, to back entrepreneurs of color. For example, in October of 2015, Valley Economic Development Center (VEDC) and JPMorgan Chase & Co. announced a new lending program for African American-owned small businesses in New York City, Chicago and Los Angeles that included learnings from the creation of the Entrepreneur of Color Fund in Detroit.
The National African American Small Business Loan Fund is boosting economic opportunity for minority-owned businesses in these cities and help them serve low-income communities by providing them with greater access to capital, technical assistance and financial consulting. JPMorgan Chase has contributed $8 million in grants and investment capital to help VEDC reach its goal of creating a $30 million loan fund.
At JPMorgan Chase, we believe that small businesses are vital engines of job growth and economic mobility throughout the country. Through our investments we are helping to strengthen local economies by creating and preserving quality jobs, promoting economic inclusion and by creating opportunity for underserved populations. To accomplish these goals, the firm works closely with a variety of Community Development Financial Institutions (CDFIs) – specialized financial institutions that provide financing for small business and community projects – to help people across the country who are unable to qualify for traditional loans.
Lee: Why Detroit?
Shore: Though Detroit’s progress has been monumental, the market conditions still make it difficult for entrepreneurs in neighborhoods outside of the Downtown and Midtown business corridors to access traditional capital. With roughly 50,000 entrepreneurs of color, Detroit is the fourth largest U.S. city for the number of minority-owned businesses. Many of these businesses do not have access to traditional forms of capital and need significant technical assistance. Further, studies have shown that issues such as insufficient business skills, business networks and accessible capital disproportionately affect entrepreneurs of color. Many of these small businesses are cornerstones to livable, vibrant neighborhoods, but have not been sufficiently supported for decades. JPMorgan Chase wants to ensure that all minority-owned small businesses have the opportunity take part in the city’s comeback and benefit from Detroit’s revival.
Lee: Is it focused on aspiring or existing entrepreneurs?
Shore: The EOC Fund is focused on existing minority entrepreneurs who provide goods and services to local neighborhoods and businesses. To further support these businesses, the EOC Fund is also administering technical assistance funding to ensure that entrepreneurs not only gain access to capital, but also acquire the skills they need to management successful business.
For example, due to the up-tick in contracting opportunities for entrepreneurs of color and businesses that employ Detroit communities of color, the EOC Fund has been financing a significant amount of small general contractors.
What’s the dollar investment and how is it being funded?
Shore: The EOC Fund is a $6.5MM loan fund, created by The Detroit Development Fund (DDF), JPMorgan Chase & Co. and the W.K. Kellogg. JPMorgan Chase committed $3.5 million to the EOC Fund as part of the firm’s $100 million, five-year commitment to Detroit’s economy recovery. Loan sizes will vary, but the average loan will range from $50,000 to $150,000.
Lee: What are some of the obstacles small businesses face in a city like Detroit and how does EOC address these issues?
Shore: EOC in Detroit, like many other cities across the nation, face significant barriers to entry including insufficient business skills, networks and capital. Additionally, many of these businesses operate under circumstances that make it difficult for community lenders to extend credit, such as not having an existing business banking relationship, have revenue under $5 million and capital needs under $150,000.
The EOC Fund provides small business with capital they need to grow and, due to their flexible underwriting, the Fund is able to provide capital to a larger number of minority-owned small businesses. In addition to the capital, the EOC Fund also ensures that theses budding businesses receive the technical assistancenecessary to run and manage a successful business.
Lee: How many businesses has the program supported and what have been overall results to date?
Shore: To date the fund has closed 18 loans, valued at $1.3 million to 15 companies. As an added benefit, this funding has helped create or retain 135 jobs in the process.
Lee: What are the benefits of this kind of private-nonprofit collaboration? Do you see other examples of this working across the city?
Shore: Public-private partnerships are more important than ever for creating unique solutions to economic challenges. Through our work with nonprofit and city leaders, JPMorgan Chase is identifying the most pressing issues across the city and working to address them. Over the past two years the firm has focused on community development, neighborhood stabilization, workforce training, small business expansion and economic growth, with the help of our partners.
Lee: What does small business mean to Detroit? What kind of role do you see entrepreneurs playing in the revitalization of the city and share with us success stories.
Shore: Small businesses are vital to Detroit’s economic revitalization. Providing small business with necessary capital and resources is not only essential for growth, but is key to Detroit’s comeback. These small businesses serve neighborhoods and communities and more importantly jobs for many Detroit residents. Our position as a leading small-business lender gives us a unique vantage point and the ability to help businesses grow and succeed in Detroit and around the world.
One of the first recipients of a contractor line of credit from the EOC Fund was a retail clothing company, Love Life Swagger. The company is owned by a very tenacious 36-year old, African-American man, Trellis Mercer, who prior to an EOC loan, used his personal funds to run his business. Since receiving a line of credit from the Fund, he has been able to secure additional contracts to sell his products in retail locations nationwide. Through the EOC Fund, Love Life Swagger has been provided with technical assistance funds to assist with product development and additional marketing.
For more information, please visit: https://www.jpmorganchase.com/corporate/Corporate-Responsibility/detroit.htm