How Black Businesses in New York City, Chicago, LA Got Cash Infusion
By Robert Stitt
The Great Recession was hard on everybody, but some sectors of the American economy took a greater hit than others. In the same way, as the country has started to recover, not every community has fared as well as others. In many instances, the same groups who were hit the hardest by the recession are also having the most difficulty coming back out of it. One such group is the black business sector. A large reason for the struggle comes down to one word: capital.
According to Black Enterprise, most other sectors of the business community were able to access the money needed to grow their businesses over the last eight years. African American businesses, however, have not had this same benefit. In quantifiable numbers, African American businesses account for less than 2 percent of all Small Business Association Loans, even though Black-owned businesses comprise over 7 percent of the country’s non-farm businesses.
One financing company has taken note of this disparity and is looking to do something about it. JP Morgan Chase has contributed $3 million to help boost economic development in black and minority businesses. The money will be channeled through the Valley Economic Development Centers (VEDC) in New York City, Chicago and Los Angeles.
According to their website, the VEDC oversees a National African American Small Business Loan Fund specifically designed to help “minority-owned businesses in these cities and help them serve low-income communities by providing them with greater access to capital, technical assistance and financial consulting.” The VEDC has a goal of establishing a $30 million loan fund. The $3 million from JP Morgan Chase makes a significant mark toward that end.
The VEDC is listed as a California 501(c)3 Community Development Financial Institution (CDFI). According to Black Enterprise, the organization “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.”
The vast majority of loans have gone to businesses generating “low to moderate” incomes. In 2010, JPMorgan Chase donated $5 million to the VEDC for a California statewide initiate targeting small businesses in California and was able to help thousand of low-income minority small businesses.
One client helped by the VEDC loan program was Norwood J. Clark Jr., the CEO and president of Uncle Darrow’s, a family-owned Cajun/Creole diner in Los Angeles. “It is amazing how you will have bankers who love your product; love your service, but won’t loan you any money,” he said.
Another thing that the VEDC does differently is to provide customized assistance in the form of one-on-one mentoring. The advice focuses on the cash flow management of the individual entrepreneur and not some random textbook example. Loans from the VEDC National African American Small Business Loan Fund do not require collateral for loans under $50,000, have excellent terms, and boast a 48-hour to one-week turnaround.