Strengthening Communities: A roadmap for small business investment

By: Darlene Goins

After a long week, one of my favorite rituals is heading to Bagel Street Café for a freshly baked cinnamon crunch bagel and an Americano. I believe small businesses make our neighborhoods vibrant places to live, work, and raise families. So, when the pandemic hit, it was difficult seeing them struggle.

It goes without saying that the COVID-19 pandemic brought unprecedented challenges to the business community overall but especially to diverse small business owners who, according to reports, were disproportionately impacted.

But in times of great struggle, often comes an opportunity.

I can remember when our CEO Charlie Scharf announced 富国银行 would donate all of the gross processing fees Wells Fargo earned from the government for administering the Paycheck Protection Program in 2020 back into the small business community as part of a new Open for Business Fund.? It was a proud moment for me – a demonstration of the vital role small businesses play in our economy and vote of confidence in their resiliency. Over the last four years, I’ve watched the impact of our Open for Business Fund—a roughly $420 million small business recovery effort that worked with more than 200 community organizations to provide greater access to capital and technical assistance. Today, that program is run by the team I lead, and we’ve been reflecting on the latest impact data.

Grantees tell us that since launch, the Open for Business Fund has benefited more than 336,000 small businesses and empowered them to preserve or create more than 461,000 jobs. It’s humbling and inspiring to see how philanthropic investment can achieve scale when the nonprofit and private sectors come together.

Nonprofits say the lessons learned from the Open for Business Fund are a roadmap for future investment in the small business community.

• Understand the value of flexible capital for #nonprofits and #CDFIs. By design, Wells Fargo grants were given as flexible capital so that Community Development Financial Institutions (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 and 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 provided 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.

Perhaps the best way to illustrate the impact of our funding is through the stories of businesses that benefited. Take, for instance, the story of Shandon Benjamin-Fox, a skilled chef whose family-run business, 1 Foxy Lady Café & Catering in Jacksonville, FL, had launched right before the pandemic. Sixty percent of the income came from catering, and without immediate financial support, the business faced shutting down. Thanks to Local Initiatives Support Corporation (LISC) Jacksonville, Shandon received $10,000 to help her bridge the gap, keep her employees, expand her vegan food lineup and create a line of salad dressings, jams, and seasonings.

There’s also JM Custom Iron Work in Tempe, Arizona, a welding company that builds and installs spiral staircases, security doors, fencing, and other custom designed projects using iron. After purchasing a vacant lot, Owner Eugenio Morales used a grant from Open for Business Fund awardee Raza Development Fund to develop a new building for his business, allowing him to hire more workers, make his process more efficient, and expand the company’s portfolio of services to include carpentry and masonry.

Four years later, the Open for Business Fund has proven to be transformative for communities. Right now, the program is actively empowering small business owners to grow by acquiring valuable tangible assets such as commercial property, equipment, and technology.

United Way of Greater Atlanta , working with Invest Atlanta, received a $20 million grant to further its mission of helping local small business owners build wealth by investing in assets such as commercial space, equipment, and technology. This funding enabled Dr. Dara-Lynn Geiger and Dr. Meisha Miller, owners of Chiropractic Hub, to set up their space, including infrastructure like drywall and electrical work to office furniture and fixtures. Without this financial assistance, the process of opening their practice would have been considerably delayed.

The Open for Business Fund has helped thousands of small businesses stay afloat during a tough economic time. Of these businesses served, grantees report to us that 79% were owned by diverse individuals, 72% of owners identified as being low-to-moderate income, and 53% were women-owned small businesses.

Small business ownership can be a pathway to generational wealth. With access to capital, resources, knowledge and networks, entrepreneurs thrive and ultimately create jobs and stronger communities. But small business investment takes collaboration to reach meaningful scale. Today is a day to celebrate collective success.