JPMorgan Chase Is Taking Its Fund for Minority-Owned Businesses to Two More Cities
Many struggling urban neighborhoods are in a deeper economic hole because small businesses there are “unbankable”; low property values and unsteady employment climates make it hard for would-be entrepreneurs to build the collateral or credit histories they need to get financing. JPMorgan Chase, the nation’s largest retail bank, has been experimenting with ways to get around that barrier, and on Tuesday it announced plans to extend that effort into two major American cities.
The bank said it would expand its Entrepreneurs of Color Fund (EOCF) into San Francisco and the South Bronx, investing $3.1 million and $2 million, respectively, in the two communities to develop and support minority-owned local businesses.
The investments, while themselves small, are part of a broader push by JPMorgan Chase to direct its $250 million in annual philanthropic spending toward economic revival programs and job creation. More broadly, they reflect a growing willingness among private-sector businesses to take the lead in tackling what have traditionally been public-sector issues, like economic development and training. (Read Fortune President Alan Murray on that topic in today’s CEO Daily newsletter.)
They also follow a recent pledge by the bank to build more branches and expand hiring in underserved neighborhoods and expand its philanthropic work, in response to an expected windfall from the passage of federal corporate tax cuts last year.
JPMorgan Chase has been road-testing the EOCF model in Detroit, as part of a broader, five-year commitment it made to neighborhood revitalization in that city. To pump capital into underfinanced businesses, it has teamed up with community-based development groups that aren’t bound by the same lending restrictions as traditional banks. (Fortune wrote about the Detroit project in a feature in its Sept. 15 issue.) The Detroit initiative’s good results so far have helped convince JPMorgan Chase to expand the idea nationally.
In San Francisco, the bank’s community-development partners will include Working Solutions, ICA Fund Good Jobs and Pacific Community Ventures—groups that specialize in helping very small, mid-sized and larger businesses, respectively, says Peter Scher, JPMorgan Chase’s global head of corporate responsibility. The South Bronx partners are the Excelsior Growth Fund and Accion East.
In Detroit, many businesses funded by Chase-backed EOCFs have been focused on contracting and construction—industries that generate middle-wage jobs that don’t require a college education. Scher says that the Chase Center in Mission Bay, a new stadium for the NBA’s Golden State Warriors, slated to open in 2019, could open up new opportunities for entrepreneurs in those professions.