Our strategy to help Milwaukee Black-owned small businesses thrive

In 2019, Taj Pearsall had a rock-solid business plan and an even stronger team. All he needed to open his organic chicken wing restaurant in Milwaukee was financing to order equipment and supplies. But when Taj applied for a loan at several local banks, he was denied. It was not clear to Taj why and the rejections and delays were taking an emotional and financial toll. It was starting to feel like he may need to walk away from his dream.

At the eleventh hour, Taj set up a meeting with Terese Caro, President & CEO of Legacy Redevelopment Corporation, a Milwaukee-based community development financial institution (CDFI). And that’s when his business took off. Taj was able to receive technical assistance and access to capital – everything he needed to grow.?Today, Buffalo Boss, located in the heart of Milwaukee’s Sherman Park community, is thriving.

In 2021, Diane Stowers – the owner of the only Black-owned gas station in the state of Wisconsin – was feeling ready to transition her career. Recognizing her unique situation and her desire to ensure that Black entrepreneurs remain represented in the industry, Stowers wanted to sell her business to another Black leader. That’s when Northwest Side Community Development Corp. Executive Director Willie Smith got to work.

The CDFI leader scanned his connections and found Kai Trimble-Lea, a former restaurant owner and bank consultant, who was ready to step up to the challenge. To finance Kai’s purchase and to renovate the facility, Smith’s CDFI authorized a $893,000 loan. Kai’s renovations, including a new restaurant, are now complete.

These are American success stories. To close the racial wealth gap in our country, we certainly need more of them.

How can a financial security company help to create Black and African American prosperity? At Northwestern Mutual, we believe in a sustained and multi-faceted commitment, working with partners to help create an ecosystem where anyone can thrive. That’s why we’ve been involved in rebuilding Milwaukee neighborhoods, investing in local schools, funding Black entrepreneurs and supporting disadvantaged youth.

Alongside those direct engagements, we see another clear opportunity to help complete the ecosystem.

Last August, our company announced Northwestern Mutual’s $100 million impact investing fund aimed at advancing financial inclusion and closing the racial wealth gap. It was yet another exciting announcement to come from our company’s Sustained Action for Racial Equity Task Force. Led by our CEO, this diverse team of leaders from across our company is working to drive repeatable, enduring and significant change in the communities we proudly serve.

For months, our task force has pursued a long list of strategies to put our impact investment dollars to work to create significant change. Today, I’m excited to announce our latest decision: Northwestern Mutual will invest $5 million in two mission-based, Black-led-and-operated Community Development Financial Institutions (CDFIs) here in Milwaukee – Terese Caro’s Legacy Redevelopment Corporation and Willie Smith’s Northwest Side Community Development Corporation.

Lack of access to bank financing and capital is one of the underlying issues driving economic inequality and the racial wealth gap. Black owned businesses are denied loans at twice the rate of their counterparts. According to the Brookings Institution, large banks approved 60% of loans sought by white small business owners, compared to just 29% approval for loan applications by African Americans.

Locally, the challenge is great. Milwaukee has no Black-owned banks that support small business owners. Which is why these local CDFIs can be so powerful – they help fill a gap and provide support that may otherwise be unavailable. CDFIs are private financial institutions dedicated to delivering responsible, affordable lending to help low-income, low-wealth, and other disadvantaged people and communities join the economic mainstream. They seek out businesses aligned to their mission and vision to create Black wealth and transform communities of color. They provide access to small-to-medium-sized loans as well as technical assistance to enhance entrepreneurs’ business plans, increase their business acumen, and ultimately help Black business owners to become bank-ready and grow in the future. Both of the CDFIs that Northwestern Mutual is supporting are actively invested in local businesses in the manufacturing, commercial and residential real estate, retail, restaurant, adult home, hospitality, technology and transportation sectors in Milwaukee.

For Taj and his Buffalo Boss restaurant, that CDFI relationship was the opportunity for him to realize his dream.

“Terese was so helpful to me,” he said. “Beyond access to financing, she helped me to understand the business of my business, the options available to entrepreneurs, what was smoke and mirrors and what was the real deal. Business owners need access and opportunity, and Terese understood the assignment.”

For Northwestern Mutual, the injection of capital into the CDFIs is an investment. We expect to see a return on our impact investments and we will return that value to our nearly five million policyowners. In the process, we’re going to support the growth and expand the capacity of organizations that can inject capital and insights into Black-owned small businesses at-scale. We believe that this will be a win-win for the businesses, the CDFIs, for Northwestern Mutual and the entire Milwaukee community.

I want this investment to be catalytic. My hope is that this $5 million investment will create momentum for other companies in our hometown to step up and follow suit. I’m confident that we’ll be able to share more stories like Taj's, Kai's and Diane’s as we continue driving sustainable and meaningful change in Milwaukee and across the country. Join us!