LOS ANGELES--(BUSINESS WIRE)--VEDC and JPMorgan Chase & Co. today announced an expansion of a lending program for African American-owned small businesses in Los Angeles. The National African American Small Business Loan Fund is part of a broader initiative to boost economic opportunity for minority-owned businesses in Los Angeles, as well as Chicago and New York, and help them serve low-income communities by providing greater access to capital, technical assistance and financial consulting. JPMorgan Chase, which seeded the new Fund with $3 million in grant funding through its foundation in October, announced today that it is contributing an additional $5 million in investment capital through its foundation to help VEDC reach its goal of creating a $30 million loan fund.
Facilitated by VEDC, a Los Angeles based Community Development Financial Institution (CDFI), this new Fund will provide financing for businesses across all industries. Small businesses are a critical source of jobs and economic opportunity in communities but may be credit-impaired and unable to qualify for traditional capital. Without access to sustainable financing, these businesses may miss a growth opportunity or risk closing their operations.
Norwood Clark, the owner of Darrow’s New Orleans Grill, is one of the first beneficiaries of the Fund. Clark has been operating a family-owned food-service business in Los Angeles since 1988, initially by relying on family savings. With funding from VEDC, he opened a new Cajon/Creole restaurant in Carson last month, creating 25 jobs for the community. “Most entrepreneurs in the inner city don’t have a life line or a relative they can ask ‘Can you float me half a million dollars?’” Clark said. “They usually don’t have the education or the relationships with good attorneys, CPAs or banks. They lack the resources that many other entrepreneurs come to the table with. JPMorgan Chase and VEDC are filling that void,” he said.
“As a direct small business lender and a leading intermediary of SBA loan programs, VEDC has a 40-year track record of providing business services to small businesses in low-and middle-income communities and especially in communities of color," said Roberto Barragan, President and CEO, VEDC. "Approximately 20 percent of our existing portfolio serves the African American community, and we’ve learned a great deal from working with them that we’re applying to this new fund.”
Currently, there are 268,000 African American-owned small businesses in Los Angeles, New York and Chicago -- making them among the top cities for African American-owned small businesses. With ownership of approximately 1.9 million, (7 percent of small businesses nationwide), African Americans are the fastest growing segment of small business owners.1 However, business loans to African American entrepreneurs have yet to rebound since the economic downturn in 2008.
To address this need, the National African American Small Business Loan Fund will provide short and long-term loans. Loan sizes will vary, but the average loan will range from $35,000 to $250,000. The $8 million in support from JPMorgan Chase consists of a $3 million grant and a $5 million Program Related Investment (PRI). The grant will allow the Fund to provide technical assistance and establish a loan loss reserve. This reserve will allow VEDC to expand its lending criteria to small businesses that traditionally did not qualify for a loan. The PRI establishes an initial tranche of lending capital for these businesses and will allow VEDC to raise the additional funding needed to fully capitalize the Fund.
"African American small business owners have identified flexible capital as a critical resource for growth, but they face a shortage of this kind of support," said Diedra Porche, Market Manager for Business Banking for JPMorgan Chase in Los Angeles. “CDFIs like VEDC provide small businesses with the consulting and financing they need to grow their operations. We're proud to partner with VEDC on this new fund, which will increase access to the capital and assistance that African American entrepreneurs need most."
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 financial consulting. Eligible small businesses must be majority-owned by African Americans.
Interested small businesses in Los Angeles can learn more about eligibility by contacting VEDC at (818) 907-9977 or VEDC.org.
Notable Statement of Support
"We know that mission lenders hold the key to providing a sustainable source of capital to minority borrowers and those that have been left out of the economic mainstream," said Grady Hedgespeth, Director of U.S. Small Business Administration Office of Economic Opportunity.
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.
VEDC is a leading non-profit small business lender that is changing the way small business lending is done by making it more available and impactful. With a growing footprint, VEDC has lent $380 million in direct and guaranteed loans to over 104,000 small businesses and created more than 28,000 new jobs. VEDC's mission, as a certified Community Development Financial Institution (CDFI), is to help create jobs and promote small business development in under-served communities. It provides loans and micro-financing options to small businesses, particularly those owned by women and minorities, that don't qualify for traditional financing. VEDC's expanding portfolio is composed of community-based loan funds in California, Illinois, Nevada, Utah, New Jersey, Connecticut, Florida and New York. For more information, visit www.vedc.org.