These 30+ Philly financial groups provide $10 million in loans to black and brown business owners
Philadelphia presents itself as a friendly place to do business. But we often hear in our reporting that opportunities for funding, networking, and other resources—both local and national—are harder to find when you’re a person of color.
In response to the first part of this call, a group of more than 30 small business organizations and financial institutions called Greater Philadelphia Financial Services Leadership Coalition created a fund to help Community Development Financial Institutions (CDFIs) lend to Black and Brown business owners in Philadelphia.
The coalition was formed out of efforts by the business community to get the economy back on track amid the COVID-19 pandemic. In 2020 the Greater Philadelphia Chamber of Commerce summoned business and civic leaders in Philadelphia and surrounding counties to form the Philadelphia Regional Recharge and Recovery Task Force. Last year, the coalition announced a four-year, $100 million fund consisting of a combination of debt and equity to help black and brown business owners thrive or grow their businesses amid the pandemic.
This coalition has since grown to 30 financial institutions, including the Federal Reserve Bank of Philadelphia, Pennsylvania CDFI Network and Coalition for Urban Affairs.
“Despite efforts over the past year, aid to small businesses has not met their needs, particularly minority businesses.”
The first phase of this latest effort: the Philadelphia Growth, Resiliency, Independence, Tenacity Fund – this is the PHL GRIT Fund – which launched this month.
Through the GRIT Fund, all 11 CDFIs in Philadelphia receive grants that help strengthen their businesses. The goal is to help the CDFI ecosystem grow and better serve small business owners, especially these ones facing systemic barriers to accessing capital. Among business owners of color, there tends to be more trust in local financial institutions than in giant banks, he said Dan Betancourt, Chairman of the Pennsylvania CDFI Network and CEO of Community First Fund.
The fund, which will start with $10 million in its first year, will provide loans to 1,000 black and brown-owned small businesses with fewer than 500 employees in the Philadelphia area. A spokesman said details of how the fund would be divided among the CDFIs have not yet been determined, but “grants will be made based on the needs of the CDFIs.”
The CDFIs that will receive additional direct investment from coalition members in the first phase of this initiative are book capital, entrepreneur works, corporate capital, WORK, Impact Loan Fund, Neighborhood Progress Fund and permissiveness.
“Despite efforts made over the past year, aid to small businesses has not met their needs, particularly minority businesses,” Betancourt said in a statement. “The efforts of the GPFSLC are unique – we are unaware of financial institution executives of this scale coming together to address such pressing issues.”
The coalition also aims to raise an additional $10 million in pooled philanthropies over the next year to expand CDFIs’ lending capacity. The Pennsylvania CDFI Network will manage the capacity of CDFIs, and future phases of the GRIT Fund’s efforts will aim to support larger CDFIs, including Community First Fund, PIDC capital and The reinvestment fund.
A timetable or details on how or when companies can apply were not yet available.
Some of the participating banks have offered alternatives to directly providing capital to the GRIT fund. Fulton Bank has created a loan sharing agreement to allow local, minority and regional banks to participate in and maximize investments. Some banks like Bank of America gave a “gift of leadership” to start the philanthropic fund, while others work with the coalition volunteer program, which provides accounting, marketing, strategy and legal advice to companies served by the 11 CDFIs. These business support skills have been cited as needed resources by those served by local CDFIs, the coalition noted.
“Supporting our region’s black and brown businesses during these unprecedented times is a priority for GPFSLC member financial institutions, and working closely with our regional CDFI leaders on a sustainable model has been important,” he said Jim Dever, Co-Chairman of the Coalition and President of the Bank of America Greater Philadelphia. “We look forward to successfully providing more support to business owners in Philadelphia by expanding financial resources and building capacity together with our key CDFI partners.”
Along with the Federal Reserve Bank of Philadelphia, Pennsylvania CDFI Network and the Urban Affairs Coalition, the Coalition consists of these financial institutions: