The Local Initiatives Support Corporation (LISC) has announced that its Entrepreneurs of Color Fund (EOCF) has surpassed its $500 million goal for small business lending nationwide, two years ahead of schedule.
LISC will now expand the program to double its impact, aiming to support $1 billion in financing for underserved businesses and communities.
About The Entrepreneurs of Color Fund
The Entrepreneurs of Color Fund (EOCF) promotes the success of small business owners serving communities of color with the help of local community development financial institutions (CDFIs). It provides grants, loans, and technical assistance to help them better reach businesses that the traditional market does not serve.
Steve Hall, LISC vice president of Small Business Lending, said, โWe are working to level the playing fieldโto connect promising but overlooked businesses to affordable financing so that whole communities can benefit from economic development and growth.โย
According to the Federal Reserve, Black and Latino small business owners are turned down for financing at more than twice the rate of their white counterparts.ย
Those owners are also more likely to say that a lack of financing significantly challenges their business success. So, the program mainly addresses these capital gaps that affect communities of color.
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โWe want to expand financing opportunities so owners can buy a building, purchase equipment, increase their inventory, or expand their staff,โ Hall said. โThe $500 million deployed thus far is an investment in local wealth-building. It not only benefits businesses and their employees but also expands access to goods, services, and jobs for residents in the communities where these firms operate.โ
Currently, EOCF partners with 24 CDFIs in 10 metro areas, including Atlanta, Chicago, Detroit, Los Angeles, Miami, Newark, New Orleans, New York City, Oakland, and Greater Washington, D.C.ย
The Impact So Far
This partnership has supported over 9,500 loans to small businesses in the retail, business services, food, small manufacturing, and transportation industries.ย
Approximately half of the borrowers serve low-to-moderate-income communities.
In a recent survey of owners, EOCF found that 62 percent of companies increased their staffing after obtaining a loan, and 55 percent saw revenue growth.ย
Furthermore, because of the personalized business services provided, 82 percent of owners with a low credit score (below 651) could increase their score when they apply for a loan, which better positions them for conventional financing.
Johnnie Akons, owner of Legacy Cutz in Chicago, is an excellent example of the programโs beneficiary. Unable to get a conventional loan to move out of rented space, he worked with LISC and EOCF to open his first real estate loan for his barbershop, grow his staff, build his financial expertise, and purchase commercial space for a second location two years later. Both shops serve majority-Black communities.
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โEven with all the hard work and everything I put into this business and this industry, it would be basically impossible to grow if I hadnโt been able to get these loans,โ he said.
In addition to financial support, the EOCF team collaborates with local CDFIs to identify barriers to capital flowโlike outdated underwriting approaches or gaps in digital accessโand develop products and services that respond.
โIt is clearly possible to successfully implement fair and inclusive lending policies,โ Hall said. โBut it requires a different way of thinking about the process and a willingness to step back from traditional notions about risk.โ
The W.K. Kellogg Foundation piloted the EOCF in Detroit in 2015, and JPMorgan Chase supported it. LISC took the reins as program manager in 2020 and gained other supporters, such as Fifth Third Bank, Prudential, The Rockefeller Foundation, and U.S. Bank.
More About LISC
LISC is one of the largest community development organizations, helping forge vibrant, resilient communities across America.ย
The organization works with residents and partners to close systemic health, wealth, and opportunity gaps and advance racial equity so people and places can thrive.ย
Since its founding in 1979, LISC has invested $32 billion to create more than 506,000 affordable homes and apartments.ย
It has also developed 82.5 million square feet of retail, community, and educational space and helped tens of thousands of people find employment and improve their finances.
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