The numbers say the Open for Business Fund created by Wells Fargo in 2020 to help businesses being crushed by the pandemic has been a huge success.
After all, the $420 million national small business recovery effort has benefited more than 336,000 small businesses, empowering them to keep or create 461,000 jobs in communities across the nation, the bank said.
Even more, the report indicated that the funding is reaching underserved communities, noting that 79% of the small business owners are racially or ethnically diverse, 53% are women and 72% identify as low-to-moderate income individuals.
In New Jersey, Wells has worked with Greater Newark Enterprises Corp., New Jersey Community Capital, Regional Business Assistance Corp., Rising Tide Capital and the UCEDC economic development corporation, among other nonprofits.
An even bigger success for the fund may be apparent in years to come.
Wells Fargo officials, marking the fourth anniversary of the fund this summer, said the lessons learned about lending will have great impact, as it has proven to be strengthening the small business ecosystem.
Community organizations said the lessons learned from the Open for Business Fund are a roadmap for future investment in the small business community, including:
- Understand the value of flexible capital for nonprofits and community development financial institutions: By design, Wells Fargo grants were given as flexible capital so CDFIs and nonprofits were empowered to be responsive to the unique needs of their communities. This strategy enabled nonprofits to secure new staff and acquire new technology to streamline, customize and decrease the cost of their lending and technical assistance. Increased efficiency positioned organizations to serve more small business owners, deepening community impact.
- Listen to the demand for personalized technical expertise: The program provided more than 1.1 million hours of technical assistance to small businesses, with more than 50% provided in a one-to-one format so small business owners could receive tailored expertise for their businesses. More importantly, the delivery of culturally relevant in-language expertise enabled organizations to increase small business owner engagement and expand reach.
- Expand innovations to meet the changing capital needs of small business owners: Grant funding allowed organizations to pilot new products and expand their credit box, enabling them to serve more individuals outside of the financial mainstream. Grantees report providing more than $1.4 billion in equity grants, low-cost loan products, loan deferrals, modifications and forgiveness, which provided a lifeline to businesses.
- Close the small business digital divide: As the economy has become increasingly digital, there is a critical need for small businesses to build their technology skills and confidence so they can access available capital resources and acquire new customers. Online training and support services proved to be effective in helping entrepreneurs save time and money and in learning how to pivot to online customer service models.
- Leverage grant capital to strengthen nonprofit balance sheets: Grantees report leveraging their Open for Business Fund grants to secure additional private- and public-sector dollars in support of their capital deployment and technical assistance programs, resulting in a 7:1 leverage of Wells Fargo funding.
Here’s the best part: The money for the fund was taken from financing the bank was paid by the federal government, Wells CEO Charlie Scharf said.
“We took the gross processing fees the government paid us for administering the Paycheck Protection Program in 2020 and committed all of it to a roughly $420 million fund whose singular purpose was to assist small business owners having a hard time during COVID,” he said. “Our funds went toward providing capital and expertise at scale, ultimately creating local jobs, bolstering the ecosystem of support and creating a ripple effect that continues to strengthen communities across the country.”
