Lending rules designed to curb risk can keep promising startups in low-income communities from getting financing. JPMorgan Chase has leapt that hurdle with its Entrepreneurs of Color Funds, which team with local nonprofits to steer funding to small businesses. Having proved the concept in Detroit, the bank this year set up new EOCFs in Chicago, the South Bronx, and the Bay Area; to date, JPMorgan Chase has committed a total of $13.6 million to the four funds, and financing from other investors has boosted the size of the Detroit fund to over $18 million.
The EOCFs, in turn, are part of a broader $250 million effort by the bank to boost economic development in underserved communities. In January, JPMorgan Chase announced plans to build 400 new bank branches in the U.S. over the next five years, mostly in low-to-moderate income communities, giving a boost to local businesses at a time when the number of physical bank branches in general is declining.
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