Program to fund loans for minority-owned Detroit businesses

By Corey Williams
Associated Press

DETROIT (AP) — Companies in Detroit owned by minorities or with at least half of their workforces made up of minorities will have access to business loans under a new program designed to aid the city in its economic recovery.

The $6.5 million Entrepreneurs of Color Fund was announced Tuesday morning and is expected to help businesses grow and provide jobs for residents in a city with one of the highest unemployment rates in the nation.

The JPMorgan Chase Foundation is contributing a $3.5 million grant to the program. It’s part of the foundation’s $100 million commitment to the city.

Another $3 million in program investments will come from the Kellogg Foundation. The Kellogg Foundation developed and initiated the fund.

Detroit exited the largest municipal bankruptcy in U.S. history in December.

“For Detroit’s comeback to be a true success there must be opportunity for the Detroiters who have stayed,” Mayor Mike Duggan said in a release.

The city’s unemployment rate, which hit 25 percent in 2009, stood at 14.9 percent last year

“Detroit’s strength has always come from entrepreneurs who have a great idea and can build that into a business that thrives and creates jobs,” U.S. Senator Debbie Stabenow said. “This new public-private partnership will help business owners succeed and grow, creating jobs and opportunity across the region.”

Loans will be short- and long-term, with an average range of $50,000 to $150,000. Businesses targeted for assistance primarily serve city neighborhoods and traditionally have had lower credit quality and little or no access to loans.

The loans can be used grow operations, buy equipment and fill short-term cash flow needs. Loan recipients also can get networking, marketing, business plan development and cash flow management help.

Similar loan programs weren’t available when owner and chef Don Studvent was getting his 1917 American Bistro off the ground six years ago in northwest Detroit.

“No one wants to give away money, especially when it comes to restaurants because restaurants are high-risk,” Studvent told The Associated Press. “No one has ever offered any to me. When I opened my doors, my credit score was low. I used all my resources to open my businesses. I put every single penny I had into this.”

If he could access a small loan as part of the new program, it would go toward advertising his restaurant, Studvent said.