Detroit, Mich. – Detroit Development Fund, JPMorgan Chase and W.K. Kellogg Foundation today announced that the Entrepreneurs of Color Fund in Detroit is attracting new investors and nearly tripling the fund’s size from $6.5 million to over $18 million due to strong demand for capital and a continued effort to help all Detroiters benefit from the city’s comeback.
“Our Entrepreneurs of Color Fund has created great economic opportunity for minority-owned small businesses in Detroit this year,” said Ray Waters, President, Detroit Development Fund. “This expansion of the fund will create countless new jobs and bring new goods and services to even more neighborhoods in the coming years.”
As part of JPMorgan Chase’s $150 million commitment to Detroit’s economic recovery, in 2015, the firm, the W.K. Kellogg Foundation (WKKF) and Detroit Development Fund (DDF) created a fund to provide minority-owned small businesses with access to capital and technical assistance. JPMorgan Chase originally invested $3.5 million and the Kellogg Foundation committed $3.5 million as part of its larger roughly $25 million annual investment in the city and commitment to promoting equity.
“We’re doing everything we can in Detroit to create more opportunities for people of color and providing entrepreneurs greater access to the small business capital they need to succeed is helping us accomplish that,” said Mayor Mike Duggan. “Detroiters who’ve opened or expanded a small business already have created hundreds of jobs. We need more, so I'm very grateful to JPMorgan Chase for encouraging investors to work together and grow the Entrepreneurs of Color Fund, and for its ongoing support in the revitalization of our city.”
To meet the ongoing demand of the successful fund, JPMorgan Chase and the Kellogg Foundation each are making new investments of $2 million and actively recruiting new funders to significantly increase the size of the fund. New investors include the Ralph C. Wilson, Jr. Foundation ($2.5 million), Fifth Third Bank ($3 million) and the Kresge Foundation which has committed to providing first loss guarantee up to $2 million. All of these new investments are expected to encourage other investors to support the fund.
“Thanks to this fund, minority-owned small businesses are rebuilding homes, repairing streetlights and opening neighborhood retail stores, and their entrepreneurial spirit is a big part of Detroit’s continued comeback,” said Jamie Dimon, Chairman and CEO, JPMorgan Chase. “When a fund like this is successful, we want to help it reach more small businesses and that’s exactly what we’re doing by encouraging investors to collaborate and taking this model to help entrepreneurs in San Francisco and the South Bronx next year.”
“The Kellogg Foundation developed and initiated this fund to dramatically change the wealth trajectory of people of color in the city and its neighborhoods,” said La June Montgomery Tabron, WKKF’s president and CEO. “Our commitment to the Entrepreneurs of Color Fund provides a pathway for community ownership, better jobs and more opportunities. The goal is more equitable economic development and an increase of quality of life for the people of Detroit and their children.”
Created in 2015, the fund, which is facilitated by DDF, a Michigan 501(c)(3) Community Development Financial Institution (CDFI), provides loans ranging from $50,000 to $200,000 as well as business assistance to Detroit entrepreneurs of color, allowing them to grow, hire locally and further contribute to the city’s recovery. To date, the fund has lent or approved $4.5 million to more than 43 minority small businesses, resulting in over 600 new or preserved jobs. Fifty-three percent of the loans are supporting minority women-owned businesses. Nearly three-quarters (70 percent) of the loans have supported small businesses based in Detroit neighborhoods.
The Fund is one way to ensure more Detroiters share in the city’s continued economic recovery, and the unique and scalable structure of the loan fund and technical assistance it provides has become a model for how to help minority entrepreneurs expand in other cities. In early 2018, JPMorgan Chase will launch similar loans funds for minority-owned small businesses in San Francisco and South Bronx, applying what the firm has learned from investing in Detroit’s comeback.
There are approximately 50,000 minority-owned small businesses in Detroit, making it the fourth largest city for minority entrepreneurship. The fund is designed to increase economic opportunity by providing these businesses with greater access to capital and business assistance, allowing them to grow, hire locally and further contribute to the city’s economic recovery.
“While access to capital is a critical piece of the puzzle for many small-business owners to grow and innovate, the connections this fund provides to marketing, accounting and other business services can also lead to long-term growth and sustainability” said David Egner, President and CEO, Ralph C. Wilson, Jr. Foundation. “We’re excited to join in this collaborative effort to help DDF in its ability to reach and respond to even more of Detroit’s ‘been-ups’.”
“Detroit’s full and inclusive recovery depends on its longtime residents and small businesses having access to capital to launch or expand businesses, create jobs, and spread economic vibrancy throughout the city,” said Kresge President & CEO Rip Rapson. “We’re proud to back this fund with a guarantee that will do just that by unlocking millions of additional dollars.”
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 10 (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.
“Building and maintaining strong communities is at the heart of what we do,” said Greg Carmichael, President and CEO, Fifth Third Bank. “We are very pleased to contribute $3 million to Detroit’s Entrepreneurs of Color Fund to help minority small businesses thrive.”
Anyone with questions about how to invest in the fund are encouraged to contact Detroit Development Fund at 313.784.9547.
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. is a leading global financial services firm with assets of $2.6 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 customers 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. 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.