These 30+ Philly financial groups are bringing $10M in loans to Black and brown business owners

Philadelphia promotes itself as a friendly place to do business. But we often hear in our reporting that opportunities for funding, networks and other resources are harder to come by — both locally and nationally — if you’re a person of color.

Responding to the first part of that call, a group of more than 30 small business-serving organizations and financial institutions called the Greater Philadelphia Financial Services Leadership Coalition has launched a fund to support Community Development Financial Institutions (CDFIs) in loaning money to Black and brown business owners in Philadelphia.

The coalition was formed from the business community’s efforts to get the economy back on track amid the COVID-19 pandemic. In 2020, the Chamber of Commerce of Greater Philadelphia convened business and civic leaders in Philadelphia and surrounding counties to form the Philadelphia Regional Recharge and Recovery Taskforce. Last year, the coalition announced a four-year, $100 million fund made of a combination of debt and equity to help Black and brown business owners thrive or grow their business amid the pandemic.

That coalition has since grown to 30 financial institutions, including the Federal Reserve Bank of Philadelphia, Pennsylvania CDFI Network and Urban Affairs Coalition.

Despite the efforts made in the past year, the help provided to small businesses have not met their needs, especially for minority businesses.

The first phase of this latest effort: the Philadelphia Growth, Resiliency, Independence, Tenacity Fund — that’s the PHL GRIT Fund — which launched this month.

Through the GRIT Fund, all 11 Philadelphia CDFIs will receive grants that will help strengthen their operations. The goal is to help the CDFI ecosystem grow, and better serve small business owners, especially those who face systemic barriers to accessing capital. Among business owners of color, there tends to be more trust in local financial institutions over huge banks, said Dan Betancourt, chair of the Pennsylvania CDFI Network and CEO to Community First Fund.

The fund, which will start at $10 million for its first year, will provide loans for 1,000 Black and brown-owned small businesses under 500 employees in the Philadelphia region. A spokesperson said details of how the fund will be split between CDFIs are not yet established, but “grants will be given commensurate with the needs of CDFIs.”

The CDFIs that will receive additional direct investment from members of the coalition in the first phase of this initiative are Beech Capital, Entrepreneur Works, Enterprise Capital, WORC, Impact Loan Fund, Neighborhood Progress Fund and VestedIn.

“Despite the efforts made in the past year, the help provided to small businesses have not met their needs, especially for minority businesses,” Betancourt said in a statement. “The GPFSLC effort is unique — we are not aware of financial institution leaders coming together at this scale to address such pressing issues.”

These 10 Black and Latinx entrepreneurs shared their stories for Technical.ly’s “Boosting Black and Latinx Entrepreneurship in Philadelphia” series. (Courtesy photos; image via Canva)

The coalition is also aiming to raise an additional $10 million in pooled philanthropy next year to build out the loan capacity of the CDFIs. The Pennsylvania CDFI Network will manage the capacity of the CDFIs, and the goal in future phases of the GRIT Fund effort will be to provide support to larger CDFIs, including Community First Fund, PIDC Capital and The Reinvestment Fund.

A timeline or details about how or when businesses 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 participation arrangement to allow local, minority and regional banks to contribute and maximize investments. Some banks, like Bank of America gave a “leadership gift” to seed the philanthropic fund, while others are working with the coalition’s volunteer program providing accounting, marketing, strategy and legal to counsel to businesses served by the 11 CDFIs. Those business support skills were noted 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 was important,” said Jim Dever, co-chair of the coalition and president of Bank of America Greater Philadelphia. “We look forward to successfully delivering more support for Philadelphia businesses owners by expanding financial resources and building capacity along with our critical CDFI partners.”

Along with the the Federal Reserve Bank of Philadelphia, Pennsylvania CDFI Network and Urban Affairs Coalition, the coalition is made up of these financial institutions:

• Asian Bank
• Bank of America
• Truist Bank
• Blackrock
• BNY Mellon
• Citizens Bank
• Customers Bank
• FirstTrust Bank
• FS Investments
• Fulton Bank
• Goldman Sachs
• Hamilton Lane
• Haverford Trust
• JPMorgan Chase
• M&T Bank
• Macquarie
• Meridian Bank
• Mid Penn Bank
• Morgan Stanley
• OceanFirst Bank
• PNC Bank
• Republic Bank
• Santander Bank
• SEI Investments
• TD Bank
• UBS
• United Bank of Philadelphia
• Univest Bank
• Urban Affairs Coalition
• Vanguard Group
• Wells Fargo Bank
• Wells Fargo Advisors
• WSFS Bank