Liberty Bank and Trust Company is providing $4 million in financing to the Detroit-based Entrepreneurs of Color Fund, a well-known loan fund that helps black-owned businesses in the Motor City grow.
The capital infusion by Liberty Bank, No. 3 on the BE Banks List of the nation’s largest black-owned banks, will allow the Detroit Development Fund to boost the lending capacity of its Entrepreneurs Color of Fund to $22 million.
The additional financing comes after supporters of the fund, JPMorgan Chase and the W.K. Kellogg Foundation, announced in December 2017, the fund would grow nearly three times bigger to over $18 million at once; along with help from new investments by existing backers and first-time investors.
The Detroit Development Fund facilitates the Entrepreneurs of Color Fund.
“Liberty Bank is acutely aware of the need to provide capital to small businesses,” Drextel Amy, President of Liberty’s Michigan Region, stated in a news release. “Entrepreneurs of color often don’t have consistent access to capital to fuel their basic operations and growth. Minority-owned business in Detroit are adding to the growth of Detroit and more specifically, the neighborhoods. It is crucial that we provide the capital to allow these entrepreneurs of color to participate and help in the economic rebirth of Detroit.”
As part of JPMorgan Chase’s $150 million commitment to Detroit’s economic recovery in 2015, the firm, W.K. Kellogg Foundation, and Detroit Development Fund 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, according to the news release.
“As our Entrepreneurs of Color Fund continues to create jobs and bring much-needed goods and services to Detroit’s neighborhoods, we’re thrilled that Liberty Bank has committed to the Fund this year,” said Ray Waters, President, Detroit Development Fund, in the same press release. “We have been more than pleased by the impact this fund has had on local small businesses and our community’s economy.”
On-going efforts to help Detroit’s black-owned small businesses benefit from the city’s economic comeback are helping fuel the fund’s expansion.
“Things are getting better in Detroit, but we’ve got a long way to go, and the Entrepreneurs of Color Fund is one of the most practical programs in helping us bring back the local economy,” said Mayor Mike Duggan. “Detroiters need more jobs, so I’m very grateful to Detroit Development Fund, Liberty Bank, JPMorgan Chase and Kellogg Foundation for working together to help create more opportunity for our residents in our neighborhoods.”
Detroit is it the fourth largest city for minority entrepreneurship with approximately 50,000 minority-owned small businesses.
For many of these businesses, lack of access to capital persists and is a significant barrier for business growth.
“Access to capital continues to be the most important factor limiting the establishment, expansion, and growth of Entrepreneurs of Color,” stated Alden J. McDonald, Jr. President and CEO of Liberty Bank and Trust Co via a news release. “These businesses continue to be the engine of employment and economic development and we are proud to be able to provide a means to sustain them within our communities.”
To fuel 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 fund’s size. New investors, Fifth Third Bank and the Ralph C. Wilson Jr. Foundation, are respectively investing $3 million and $2.5 million. Another new investor, the Kresge Foundation, has committed a loan guarantee up to $2 million. The new investments are expected to encourage other investors to support the fund.
The Entrepreneurs of Color Funds offers loans ranging from $50,000 to $200,000 as well as business assistance to Detroit entrepreneurs of color. To date, the fund has lent or approved $5.7 million to more than 54 minority small businesses, resulting in over 750 new or preserved jobs. 54% of the loans are supporting minority women-owned businesses. Nearly 65% of the loans have supported small businesses based in Detroit neighborhoods.
The Liberty Bank Foundation has previously partnered with JPMorgan Chase to fund the Home Restoration and Acquisition Program. It aims to support eligible home buyers with financing for the repair and restoration of residential properties purchased in the priority neighborhoods in Detroit.
More details about the Detroit Development Fund and the Entrepreneurs of Color Fund can be found at www.detroitdevelopmentfund.com.