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Supporting Inclusive Entrepreneurship

Janis Bowdler

When Detroit’s small businesses succeed, its neighborhoods and the city as a whole follow. From restaurants to barbershops, from tech startups to coffee shops, these vital hubs of commerce contribute to diverse neighborhoods, attract new residents, create jobs and power the local economy.

In Detroit — where U.S. Census data show that approximately 50,000 small businesses are owned by people of color, making it the fourth-largest U.S. city for the number of minority-owned businesses — JPMorgan Chase recognized that better meeting these entrepreneurs’ needs was vital to unleashing the power of small business as a driver of opportunity.

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Our work in the city quickly shined the spotlight on the importance of creating more abundant and creative opportunities for underserved entrepreneurs to access capital. Knowing that greater access to flexible capital — financing for small businesses that don’t meet the criteria for traditional loans — is a particularly dire need, we helped launch the Entrepreneurs of Color (EOC) Fund, in partnership with the Detroit Development Fund (DDF) and the W.K. Kellogg Foundation.

“Growing lending to minority small business owners is crucial to Detroit’s comeback,” said Ray Waters, president, DDF. “The unique structure of the EOC Fund allows DDF to provide lines of credit and loans to accommodate the needs of entrepreneurs who might otherwise go out of business but now are able to offer their services to the residents of Detroit.”

“Detroit’s entrepreneurs grapple with many challenges — a global marketplace, rapidly changing technology and new sources of competition. However, they also face a unique set of obstacles that come from working in a city that is transforming itself on a large scale. Though these challenges are particularly acute in Detroit, the ways we address them can be applied to communities across the country and around the world.”

A Strategy Sharpened in Detroit

In 2014 JPMorgan Chase launched Small Business Forward, a global philanthropic initiative to support and scale innovative approaches to boosting small business growth in critical urban markets. As a part of this initiative, JPMorgan Chase’s investment included a $7 million commitment to help launch and grow small businesses in Detroit.

With evidence that small businesses grow faster when they share resources and infrastructure, a key component of our strategy in Detroit was investing in incubators and accelerators, which provide wouldbe entrepreneurs with everything from no-cost workspaces and strategic workshops to mentorship and networking. In Detroit, this drove our support for Eastern Market, a food incubator, which has been extremely successful in launching businesses and creating jobs.

Although this highly focused incubator model yielded real results, it also became abundantly clear that a focus on women, minority and veteran entrepreneurs was essential for the city’s transformation. These insights in Detroit contributed to JPMorgan Chase in 2016 sharpening its focus on helping underserved entrepreneurs connect with capital to drive sustainable, widespread and inclusive growth.

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Moving Small Business Forward

By the end of 2016 the EOC Fund had awarded 30 loans valued at $2.75 million in critical capital, and it had created 79 jobs for Detroit businesses that are owned by minorities or that primarily employ minorities.

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Our strategy is focused on three key areas:

Diversifying High-Growth Sectors

Eastern Market is a prime example of how a geographic concentration of related businesses can help entrepreneurs get off the ground. Located at the site of three formerly blighted industrial buildings in the Eastern Market District, the regional food service hub houses incubators like Shed 5. With the help of funding from JPMorgan Chase, it also supports a network of six commercial shared-use kitchens across the city. Detroit Kitchen Connect, a technical assistance program, has helped create 42 jobs and license 35 businesses.

Expanding Entrepreneurial Opportunities

As the city’s preeminent business accelerator and incubator, TechTown clearly shows how a high-tech, high-growth incubator can address the needs of small businesses and underserved entrepreneurs. With JPMorgan Chase’s support, TechTown has engaged 15 businesses through its University District SWOT City program since 2014. TechTown also offers its Retail Boot Camp for owners to open brick-and-mortar businesses. Since 2013 it has helped 39 entrepreneurs open new businesses and leveraged over $540,000 in investments.

Expanding Access to Flexible Capital

Launched in 2015, the Entrepreneurs of Color (EOC) Fund is a $7 million loan fund for Detroit’s minority-owned small businesses to help ensure that they have the resources and tools to succeed. Facilitated by the Detroit Development Fund, with funding from JPMorgan Chase and the W.K. Kellogg Foundation, the EOC Fund provides flexible financing and access to technical assistance to businesses that lack access to traditional forms of credit and capital.

Rhonda Rowe Keeps on Trucking

Rowe Trucking is a second-generation Detroit small business owned by Rhonda Rowe and started by her father, Arthur, in 1967. With five trucks, it hauls materials such as sand, gravel, asphalt and dirt for a range of clients in the city and beyond.

Since 2015 Rowe has secured two loans totaling $75,000 through DDF’s Entrepreneurs of Color program, which has allowed Rowe to buy new trucks that let the company transport larger amounts to meet her customers’ needs.

The funds help to bridge the cash flow gap, especially since the seasonal business is closed for several months in winter due to the frigid Detroit weather. “Sometimes it takes 30 to 60 days to get paid from some of the contractors that we work for,” said Rowe. In the meantime, she needs to meet payroll, fuel the trucks, pay insurance and meet other needs that arise. The funds give her a cushion to make this all happen. “I am grateful to the whole team at the Detroit Development Fund for working with me to keep my business running.”

Rowe’s vision of the future includes expanding from five to 10 trucks as well as continuing to support the community where she works and lives.

“Because I was born and raised in Detroit, I want to hire more Detroiters,” said Rhonda Rowe, owner of Rowe Trucking. “This is very important to me, so they can take care of their families while my company can continue on for generations to come.”