Sam’s Club has announced a $2.7 million grant intended to help the nation’s smallest business owners—microenterprises—get loans. Studies show that 98% of all African American owned businesses are microbusinesses (those with five or fewer employees) and many of those businesses are also owned by women. The new initiative will help fuel minority owned businesses access much needed capital.
The grant was awarded to The Association for Enterprise Opportunity from the Sam’s Club Giving Program to help launch their TILT Forward Initiative, which improves access to capital for millions of small business owners and entrepreneurs around the country.
AEO President and CEO Connie Evans released at a statement that the TILT Forward Initiative addresses a “market failure” in business lending, noting that 8,000 business loan requests are declined each workday by financial institutions, according to the Treasury Department. Those declines cause an estimated capital shortfall of $44 to $52 billion annually.
Last year, Sam’s Club has announced a $2.5 million grant from their giving program to grow women-owned businesses and jumpstart job creation. The grants awarded to three leading non-profit organizations created the WE Lend Initiative, a two-year investment in strengthening Small Business Administration-recognized Women’s Business Centers (WBCs), intended to increase access to affordable loans and innovative training to hundreds of women entrepreneurs.
The TILT Forward Initiative allows small businesses, including 11 million Main Street businesses located in underserved communities, to have better and quicker access to some of the lowest rates available. Evans noted that “by expanding the availability of affordable financing for small businesses, the Tilt Forward Initiative will create jobs, reduce unemployment, and stabilize local communities.”
AEO, a trade association representing more than 400 mission-driven lenders and business support organizations, developed the Tilt Forward Initiative to help community and non-profit lenders and business service providers dramatically expand their capacity to empower entrepreneurs to start and grow businesses. The Sam’s Club Giving Program grant is enabling the Tilt Forward Initiative to move from a pilot program to a full launch.
“TILT Forward is an innovative program with dual potential to impact business owners at the community-level while systematically improving the mission-driven, non-bank lending network across the country,” Gayatri Agnew, Director, Opportunity at the Walmart Foundation and Sam’s Club Giving Program said in a statement. “Our support for AEO reinforces our mission to bridge the access-to-capital gap for underserved business owners.”
During a pilot program run by AEO, more than $1 million in loans were originated through the TILT Forward Initiative by Justine PETERSEN in St. Louis, and The Intersect Fund in New Jersey, two high-performing non-profit lenders known as CDFIs (community development financial institutions). AEO licensed from On Deck Capital a platform enabling the screening, servicing and underwriting of loans. Each CDFI lender sets pricing for the licensed products. The CDFIs offer a wide range of loan products and other services to businesses. Small business owners benefit from access to capital at some of the lowest prices on the market.
Data show that microbusinesses contribute to the employment of 41.3 million individuals, 31% of private sector employment in America. Yet, Evans said the TILT Forward Initiative is needed since many small business owners can’t access capital or support services.