The numbers tell the story — and the challenges that entrepreneurs of color face everywhere, including New Jersey’s largest city.
- A 2021 report from the Federal Reserve System showed 24% of Black-owned businesses receive financing compared with 48% for white-owned businesses — and this was among firms with excellent credit;
- Analysis of Paycheck Protection Program financing showed that 79% of white-owned business received their full funding — compared with just 43% of Black-owned businesses.
The racial wealth gap — spurred by an access to capital — is real. Especially in Newark, where entrepreneurs of color own more than 70% of the city’s more than 22,000 businesses.
Working with Greater Newark Enterprises Corp. and the LISC of Greater Newark, the Local Initiatives Support Corp., they have made a collective commitment of $1.7 million to help local entrepreneurs of color not only increase their access to capital, but also to receive coaching and technical assistance.
These funders are working together to support the expansion of the EOCF, which was launched nationally in 2015 to bridge gaps that have historically constrained growth for diverse-led businesses.
John Bonhomme, managing director and regional director for JPMorgan Chase’s Consumer Bank in New Jersey, detailed the vision.
“Newark holds tremendous opportunity for businesses, particularly small and medium-size ones, and it is imperative that we provide diverse business owners with access to the tools and resources that will help them grow,” he said. “The Entrepreneurs of Color Fund has unlocked capital and created hundreds of jobs around the country, and we’re excited that Newark small businesses will have the same chance to succeed.”
The expansion of the EOCF to Newark will generate nearly $2 million in loans to 50 small businesses and create 500 hours of technical assistance programming, strengthening the city’s ongoing network of support for local entrepreneurs.
Through the EOCF Newark, GNEC and LISC Greater Newark will provide loans to small and midsize businesses that can be used to hire staff, buy equipment or vehicles, pay for renovations or stock up on inventory. Beyond the capital, GNEC and LISC Greater Newark will provide technical assistance and advice on a range of topics, including marketing, merchandising, accounting, website design and maintenance, or licensing.
Sarah Keh, vice president, inclusive solutions, Prudential, said the company is thrilled to maintain its longstanding commitment to its home city.
“Entrepreneurs of color in our headquarters city have told us they need quality loans and a network of support to grow, offer quality employment and generate financial security for their employees and their communities,” she said. “The EOCF Newark answers that call at a critical time.”
It clearly is needed.
The COVID-19 pandemic has further exacerbated the situation in Newark, where a business survey found that Newark small businesses experienced $60 million to $100 million in lost consumer spending since the pandemic began.
EOCF: Learn more
Newark businesses interested in learning more about EOCF financing and services can click here for more information.
Originally launched in Detroit in 2015, the EOCF operates through a network of Community Development Financial Institutions and funders to provide underserved entrepreneurs with capital and technical support. To date, the EOCF has provided more than 1,200 loans and deployed more than $43 million in capital to Black, Latino and other underserved entrepreneurs in Detroit, the Bay Area, New York City, Chicago, Washington, D.C, and Los Angeles.
Jorge Cruz will serve as executive director of LISC Greater Newark, the local arm of the Local Initiatives Support Corp., which manages the national EOCF program.
“We’ve seen the value of these small business investments throughout the country and the way that they help bridge capital gaps facing thousands of diverse entrepreneurs,” he said.
“The EOCF approach helps strengthen our local infrastructure of small businesses, expand employment, grow local incomes and build intergenerational wealth. It breaks down racial barriers to opportunity in ways that make our city and our economy work better for everyone.”
Gregory Johnson, managing director for the Equity and Economic Opportunity Initiative at the Rockefeller Foundation, said it is time to change this. The numbers, after all, are too dramatic to ignore.
“The Rockefeller Foundation understands that opportunity in the United States is not equally distributed, especially when it comes to communities of color,” he said. “Our commitment to EOCF is a reflection of our deep belief that to make strides in closing the racial wealth gap, we must break down barriers to capital and credit access to Black and Latinx small businesses.”