CHICAGO--(BUSINESS WIRE)--Building on the success of the Entrepreneurs of Color Fund in Detroit, JPMorgan Chase today announced an expansion of the fund’s model to support minority entrepreneurs in Chicago’s South and West Sides. This investment includes $4 million from JPMorgan Chase to provide minority entrepreneurs with critical access to capital, education and other resources. Fifth Third Bank will invest $2.5 million in the Entrepreneurs of Color Fund, pending regulatory approval, bringing total funding to $6.5 million in support of minority entrepreneurs in these Chicago neighborhoods.
As part of JPMorgan Chase’s $40 million investment in creating economic opportunity in Chicago’s South and West sides, the firm will invest $4 million in two major initiatives with the goal of helping local minority-owned small businesses share in Chicago’s growth.
- Entrepreneurs of Color Fund: JPMorgan Chase will invest $3 million to launch the Entrepreneurs of Color Fund with community partners Accion Chicago and Local Initiatives Support Corporation (LISC).
- Ascend 2020: JPMorgan Chase will invest $1 million to continue a business mentoring programs at the University of Chicago and Northwestern University, part of Ascend 2020, a national network university-led programs for minority entrepreneurs.
Small businesses are key drivers of growth, and that growth is fastest among minority and women entrepreneurs, yet only 18 percent of Chicago businesses are owned by people of color, including 6 percent of Hispanics and 2 percent of African Americans, according to the US Census.
“South and West Side neighborhoods hold tremendous economic opportunity, but we can do more to ensure that everyone has a chance to participate in Chicago’s continued growth,” said Jamie Dimon, Chairman and CEO JPMorgan Chase. “The Entrepreneurs of Color Fund has unlocked capital and created hundreds of jobs in Detroit, and now we’re excited that Chicago small businesses will have the same chance to grow and succeed.”
“Supporting and empowering entrepreneurs and small businesses on the South and West Sides of Chicago creates jobs and strengthens communities for generations,” said Chicago Mayor Rahm Emanuel. “This investment complements our work with the Neighborhood Opportunity Fund and Retail Thrive Zones efforts, and we are grateful to JPMorgan Chase and Fifth Third for contributing their resources, energy and expertise to drive economic growth in all of Chicago’s communities.”
“As Fifth Third Bank’s Community Commitment demonstrates, building and maintaining strong communities is at the heart of what we do,” said Greg Carmichael, Fifth Third’s chairman, president and CEO. “After our earlier Entrepreneurs of Color Fund commitment in Detroit, we are pleased to contribute $2.5 million to Chicago’s Entrepreneurs of Color Fund to help minority small businesses thrive.”
A 2016 study by the Institute for a Competitive Inner City shows that small businesses in Chicago’s neighborhoods provide nearly 70 percent of jobs. That same report also found that an increase of just over one job per existing small businesses could create enough employment opportunities to eliminate unemployment in these neighborhoods.
Applying Insights from Detroit
In 2015, JPMorgan Chase, along with W.K. Kellogg Foundation and Detroit Development Fund, created the Entrepreneurs of Color Fund in Detroit. In December 2017, the Fund tripled in size to $18 million in to provide minority-owned small businesses with access to capital and technical assistance as part of the firm’s $150 million investment in Detroit’s economic recovery. Fifth Third Bank is also an investor in the Entrepreneurs of Color Fund in Detroit.
Since its launch, the Detroit fund has lent or approved $5.32 million to 52 minority small businesses, resulting in more than 740 new or preserved jobs. Fifty-three percent of the loans are supporting minority women-owned businesses and nearly three-quarters (71 percent) of the loans have supported small businesses based in Detroit neighborhoods.
Similar funds were created in San Francisco and South Bronx earlier this year. Collaboration between community partners and the strong need for access to capital prompted JPMorgan Chase to replicate the Detroit fund across the country, bringing its model for impact to these communities.
Chicago Entrepreneurs of Color Fund
According to data from the JPMorgan Chase Institute, the limited cash liquidity of small businesses threatens to limit the economic vibrancy of some Chicago neighborhoods on the South and West Sides. For example, businesses in the Englewood neighborhood have the smallest cash reserves, allowing for 5 or fewer cash buffer days, while businesses in Buena Park, on the North Side, have more than three times those cash reserves, with a buffer of at least 17 days should they face an unexpected cash shortfall.
Further, residents in Chicago’s South and West Side neighborhoods must travel greater distances to access everyday goods and services. In the South Shore and Pullman neighborhoods on the South Side, residents traveled 4.9 and 4.6 miles, respectively, from home for the typical purchase, while residents in the North Side’s West Ridge and North Park traveled 1.9 and 1.6 miles.
The Chicago Entrepreneurs of Color Fund aims to provide $5.5 million in flexible capital to meet the needs of hundreds of minority-owned businesses, and encourage the revitalization of these and other underserved neighborhoods through commercial and small business development. This philanthropic investment will help create jobs and increase revenues for local businesses.
Through this initiative, Accion Chicago and LISC commit to assisting 1,000 entrepreneurs of color in need with a mix of capital, free technical assistance and coaching services. Accion Chicago and LISC focus on 15 communities on the South and West Sides, which are marked by segregation, high levels of intergenerational poverty and historically low levels of small business creation. Once the entrepreneurs are ready to apply for financing, Accion Chicago will use the investments from JPMorgan Chase and Fifth Third Bank to deploy loan capital up to $100,000, while LISC will provide loans between $100,000 and $500,000.
Eligible entrepreneurs can be in the start-up stage of their business or existing, legacy businesses—allowing more businesses to stay local and invest in their neighborhoods. These entrepreneurs are typically unable to qualify for traditional loans, often due to previous credit challenges, limited financial collateral, short business history or informal businesses practices.
“Accion Chicago provides capital, coaching, and connections to help neighborhood entrepreneurs grow,” said Brad McConnell, CEO of Accion Chicago. “We’re excited to partner with JPMorgan Chase, LISC, and Fifth Third because investing in small business owners is the most effective way to create jobs and wealth in the communities that need them most. The small businesses we serve create or maintain 3.5 jobs on average with our help, and 96 percent of our clients continue to operate two years after we provide a loan (compared to just 65 percent of all small businesses).”
“This is a tremendous opportunity to expand our investments in entrepreneurs who reflect the rich and vibrant cultures of Chicago neighborhoods,” said Maurice A. Jones, LISC president and CEO. “LISC's experience puts to rest concerns that some communities are too risky for new businesses, with 97 percent of LISC-financed entrepreneurs flourishing as they create jobs and expand local incomes. This work is about catalyzing opportunity so that everyone—no matter their race, or zip code, or family background—has the chance to contribute to Chicago’s prosperity, and to share in its benefits as well.”
In addition to the $5.5 million allocated for Accion Chicago and LISC, the announcement includes an additional $1 million investment from JPMorgan Chase for the Ascend 2020 program. The expanded funding will enable the University of Chicago and Northwestern University to assist an additional 70 small businesses.
Through Ascend 2020, best-in-class universities across the country connect minority entrepreneurs to mentoring, supplier networks and community partners to improve access to the 3-Ms: management strength (through business education), markets (business-to-business and consumers), and money (seed capital, flexible credit and equity investment).
“Providing education and preparation for entrepreneurs is an important part of the University’s positive impact in Chicago and beyond, and doing that effectively requires seeking out people of all backgrounds who can apply their talents toward venture creation and economic development,” said Robert J. Zimmer, president of the University of Chicago. “We are grateful to JPMorgan Chase for its support of this partnership, which will enhance our existing commitment to supporting diversity and local economic growth, contributing to economic activity that benefits our communities.”
"This partnership links Northwestern and the Kellogg School with diverse business and nonprofit communities on the South and West Sides, and it will help businesses scale and retain and create jobs,” said Northwestern President Morton Schapiro. “We see connecting with Chicago and its diverse communities as part of our mission as a great University and good neighbor. We are excited to be a part of this effort, because it will stimulate innovative economic development in these neighborhoods and expand our students' knowledge about how to address issues in low and moderate income communities.”
The University of Chicago’s Ascend 2020 program supports entrepreneurs with annual revenues under $1 million, while Northwestern’s program supports minority-owned businesses with more than $1 million in annual revenues.
Both Northwestern and the University of Chicago have participated in Ascend 2020 since June 2017, and have served a combined 43 entrepreneurs to date through the program.
About JPMorgan Chase & Co.
JPMorgan Chase & Co. (NYSE:JPM) 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 Fifth Third
Fifth Third Bancorp is a diversified financial services company headquartered in Cincinnati, Ohio. As of March 31, 2018, the Company had $142 billion in assets and operated 1,153 full-service Banking Centers and 2,459 ATMs with Fifth Third branding in Ohio, Kentucky, Indiana, Michigan, Illinois, Florida, Tennessee, West Virginia, Georgia and North Carolina. Fifth Third operates four main businesses: Commercial Banking, Branch Banking, Consumer Lending and Wealth & Asset Management. Investor information and press releases can be viewed at www.53.com. Fifth Third’s common stock is traded on the Nasdaq® Global Select Market under the symbol “FITB.” Deposit and Credit products are offered by Fifth Third Bank. Member FDIC.
Accion helps neighborhood entrepreneurs grow. We provide the capital, coaching, and connections small business owners need to create wealth and jobs throughout Illinois and Indiana. By partnering with entrepreneurs, Accion offers the most cost-effective way to invest in underserved communities. Where small businesses thrive, jobs are created, and investment into the community increases.
With residents and partners, LISC forges resilient and inclusive communities of opportunity across America – great places to live, work, visit, do business and raise families. Since 1979, LISC has invested $18.6 billion to build or rehab 376,000 affordable homes and apartments and develop 63 million square feet of retail, community and educational space. To learn more, visit www.lisc.org.
About Northwestern University
Founded in 1851, Northwestern University is one of the country’s leading private research and teaching universities with an enrollment of approximately 8,000 full-time undergraduate students and approximately 8,000 full-time graduate and professional students and approximately 2,000 part-time students on campuses in Evanston and Chicago, Illinois, and Doha, Qatar. Northwestern combines innovative teaching and pioneering research in a highly collaborative environment that transcends traditional academic boundaries. Northwestern provides students and faculty exceptional opportunities for intellectual, personal and professional growth in a setting enhanced by the richness of Chicago.
About the Polsky Center
The University of Chicago Polsky Center for Entrepreneurship and Innovation brings the power of ideas in the laboratory, classroom and community to the world. Through education, resources, and programs, the Polsky Center commercializes discoveries, partners with companies, and attracts venture capital. The Polsky Center runs UChicago’s top-ranked business accelerator, the Edward L. Kaplan, ’71, New Venture Challenge, which has helped launch more than 200 companies worldwide that have gone on to achieve more than $9 billion in value and raised over $600 million in funding. The mission of the Polsky Center is to support students, faculty, alumni, and community members by bridging the gap between knowledge and practice, idea and action, and research and impact. By igniting a spirit of innovation and fostering connections that extend across the University, city, region and world, the Polsky Center enables more ideas to have a meaningful impact on society. Learn more at polsky.uchicago.edu.