Over the past eight years, while other sectors of the community have been able to access dollars to grow their small businesses, African American-owned small businesses continue to have challenges in accessing capital.
They continue to be below 2% of all Small Business Administration Loans, with many African American business communities having yet to fully recover from the recent recession.
[Related: JPMorgan Chase Launches Loan Fund For African American-Owned Small Businesses]
JPMorgan Chase is seeding $3 million to expand VEDC’s lending criteria and help New York, Chicago, and Los Angeles African American-owned small businesses that do not qualify for traditional financing.
JPMorgan Chase and VEDC have teamed to launch The National African American Small Business Loan Fund which aims to lend $30 million in the top three markets for African American-owned small businesses. The announcement was made on Friday, at JPMorgan Chase & Co’s World Offices in New York City.
Throughout its history, VEDC, a California 501(c)3 Community Development Financial Institution (CDFI), has assisted more than 100,000 businesses in creating and retaining over 25,000 jobs, opening over 1,900 new businesses. VEDC has also provided more than $340 million in direct and guaranteed lending to small businesses. Roughly 75% of its client base falls in the low-to-moderate income bracket, as well as over 45% of minority and 55% women-owned enterprises.
VEDC also has a long-standing fund history with JPMorgan Chase. VEDC received a $5 million grant from JP Morgan Chase in 2010 for a California statewide small business lending initiative and, because of JPMC support, VEDC was able to finance a total of $51 million to 340 businesses, which created 241 businesses, 2,055 jobs, and preserved 5,303 jobs within 3 years.
Uncle Darrow’s Cajun/Creole Eatery in Los Angeles represents the importance of the VEDC and JPMorgan Chase partnership. Norwood J. Clark Jr. is the CEO and president of Uncle Darrow’s, which has been operating as a family-owned business since 1994, opening their current location in Marina Del Rey in January 2001. The company offers healthier versions of fast food and prepares the majority of its products out of a 1,200 square foot commissary in Los Angeles.
With funding from VEDC, Uncle Darrow’s opened a second location in October, 2015. The new venue offers breakfast and lunch featuring Uncle Darrow’s award-winning Cajon/Creole recipes, and in the evening will include a full bar. With this expansion, Uncle Darrow’s is projected to create an additional 30 new jobs in the area. Check out this video.
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“It is amazing how you will have bankers who love your product; love your service, but won’t loan you any money,†Clark told an audience during a breakfast conversation titled ‘Investing in the Success of African American-owned Businesses,’ hosted by JPMorgan Chase, VEDC, and Black Enterprise.
When he was ready to launch Uncle Darrow’s he went to someone with whom he had formed a professional relationship with over the years, and who was able to help him get the financing he needed. “I can’t stress enough the value of having relationships,†Clark says. “I don’t expect everybody to embrace my vision. You have to go out and seek the people who want to help you, that may mean going through 75 to 100 people.â€Â Find someone, a mentor who can shepherd you along the way, he adds.
Access to capital, particularly to loans between $50,000 and $350,000, presents a major obstacle to growth. “We learned that African American owned small businesses are truly small, averaging $90,000 to $100,000 a year in sales,†notes OC Isaac, VEDC’s vice president of national strategic initiatives. “To respond to that we have
developed a fund (National African American Small Business Loan Fund) that is going  [to] deploy capital in loan amounts in the size of $35,000 to $250,000, which allows us to address the smallest of African American small business to the largest of African American small businesses.â€As he explains, many of these dedicated loan funds that have gone to market have done so as a microloan program, so under $50,000, or a small business loan vehicle that is $50,000 to $350,000.  What’s more, Isaac says VEDC will provide a customized upfront technical assistance platform that is not based on a classroom setting but one-on-one mentoring, business advisory that focuses on the cash flow management of an individual entrepreneur. The National African American Small Business Loan Fund also features affordable loan terms, including no collateral required for loans under $50,000 and a 48-hour to one week turnaround.