Building on the track record of its Entrepreneurs of Color Fund in Detroit, JPMorgan Chase is expanding the program to the Bronx and San Francisco. The two new loan funds, totaling more than $5 million, will provide much needed capital and technical assistance to minority-owned small businesses.
San Francisco and New York City’s tech startups are hardly struggling. But minority-owned small businesses, like their counterparts in other areas of the country, struggle to obtain the capital they need to grow and thrive. And in cities with fast-growing economies, large swaths of the population are often left out of the economic gains.
“Creating inclusive growth is a challenge facing cities all over the world, and that’s especially true in places like San Francisco and the South Bronx,” said Peter Scher, Chase’s global head of corporate responsibility. “We want to help more Americans share in the rewards of a growing economy.”
A Model That Worked
The new funds will benefit from lessons learned in Detroit over the past two years. “We saw a model that worked,” says Scher. “And we wanted to see if there were other places where we could replicate that.”
The Entrepreneurs of Color Fund fund was launched in Detroit two years ago with the W.K.Kellogg Foundation and Detroit Development Fund. Initially $6.5 million, it has nearly tripled to more than $18 million. Since its launch, the Detroit fund has lent or approved $4.7 million to 45 minority small businesses, resulting in more than 600 new or preserved jobs, according to Chase.
To date, there’s been just one default. That‘s particularly noteworthy since many of the recipients had trouble getting traditional funding. The loans ranged from $50,000 to $200,000. More than half went to minority women-owned companies and 70% to neighborhood-oriented enterprises. “We were focused on pushing economic development into parts of the city that aren’t getting the attention they need,” says Scher.
The funds are reaching entrepreneurs like Detroit small business owner Felicia Maxwell (pictured above with Jamie Dimon of JP Morgan Chase). Maxwell got a $60,000 loan from the Entrepreneurs of Color Fund, along with a $45,000 grant from Motor City Match, in 2016. The money helped her move Fit4Life, her then-three year old fitness business from her 900-square-foot basement to a brick and mortar location of over 3,000 square feet, grow from nine clients to over 70 and buy $35,000 worth of equipment.
A B Corp, the company also works with schools and other organizations to improve the health of children and adults in underserved communities. “Everything fell into place,” says Maxwell. “I’m still pinching myself.”
The new funds, part of Chase’s larger Small Business Forward program aimed at helping women, minority and veteran entrepreneurs, will kick off with $3 million to San Francisco and $2 million to the South Bronx.
In San Francisco, the partners include Working Solutions, ICA Fund Good Jobs and Pacific Community Ventures. The various partners will focus on different market segments and needs. For example, Working Solutions will make loans of $25,000 to $50,000, while Pacific will address borrowers needing $200,000 or more.
The first step is to pinpoint the most pressing needs over the next couple of months. “Once we have a better understanding of where we can get the biggest bang for our buck, then we can begin to expand,” says Scher.
Chase’s strategy is very much focused on partnerships. The goal is for the new funds to attract additional funding from other partners. In San Francisco, says Scher, the team is also meeting with local tech companies about providing technical support and getting some of the small businesses into their supply chains.
“We want to test the market and, if it’s as successful as Detroit was, our expectation is we will continue to grow it ourselves and through other partners,” says Scher. “I don’t think we could have come in here with a bigger fund.”
Making Cities Fair
For leaders in San Francisco and New York, the fund is a welcome addition to their small business initiatives, especially those aimed at underserved entrepreneurs. Small businesses create most of the jobs in cities, particularly in distressed inner city neighborhoods, according to research by the Institute for a Competitive Inner City.
“These resources will help break historic barriers that have hindered the economic success of these businesses and will continue to make New York City the fairest big city in America,” said Jonnel Doris, director of the NYC Mayor’s Office of Minority and Women-owned Business Enterprises.
Photo Credit: Rick Osentoski/AP Images for JPMorgan Chase & Co.
Anne Field is a New York-based journalist who writes about social enterprise and impact investing. A version of this article originally appeared on her Not Only For Profit blog on Forbes.com.