Los Angeles has the largest small business economy in the U.S., with over 250,000 small businesses.
However, there’s a shortage of capital available for these small businesses, and entrepreneurs of color are disproportionately affected.
Earlier this month, the Entrepreneurs of Color Fund (EOCF) program was launched in Los Angeles to address this shortage. With $2.65 million in funding to support historically disadvantaged small business owners in Los Angeles, the fund is designed to help increase the availability of capital and business resources to strengthen small businesses owned by underserved entrepreneurs.
“Our goal is to build an inclusive economy,” said Jenn Piepszak, Co-CEO of Consumer & Community Banking at JPMorgan Chase at the fund’s launch event at Chase’s Community Center branch in the Crenshaw District.
She added, “we know that for too long Black and Latino Americans, especially, have missed out on our country’s growth and prosperity.”
EOCF is a national collaboration with the Local Initiatives Support Corporation (LISC), a network of Community Development Financial Institutions (CDFIs), JPMorgan Chase and additional funders.
To date, the EOCF has provided over 1,200 loans and deployed more than $43 million in capital to entrepreneurs of color nationally, in cities including Detroit, the Bay Area, South Bronx, Chicago and the Greater Washington area.
Los Angeles is now the sixth city served by the program and according to JPMorgan Chase while Black and Latino residents make up 8% and 49% of Los Angeles County’s population, they only own 2% and 11% of all businesses, respectively.
Speaking at the event, Diedra Porché, a Managing Director at Chase who leads the bank’s Small Business Banking Operations in California, explained that loan capital in Los Angeles has historically been concentrated in micro-loans of under $100,000 or loans larger than $250,000, creating a ‘missing middle’ for many small businesses. She noted that the program will help address this ‘critical’ need.
According to additional figures provided by JPMorgan Chase, the Los Angeles County small business capital landscape is characterized by a significant shortage of capital to meet small business needs and disproportionately low rates of traditional lending in neighborhoods with high concentrations of Black and Latino residents. As a result there is an unmet demand of $60 billion for small businesses in Los Angeles County annually.
“When we started our business, we used our own money, our own credit cards, not knowing that there were financial tools and products out there that would have helped our business grow. Programs like this will help businesses of color be smarter, scale and become bigger,” said Joe Ward-Wallace, co-owner of South LA, who also spoke at the event.
The $2.65 million funding for EOCF Los Angeles program comes as a grant from JPMorgan Chase to support five diverse-led CDFI organizations working in collaboration who will administer and execute the program with local small business borrowers.
The Local Initiatives Support Corporation’s Los Angeles office (LISC LA), Accion Opportunity Fund (AOF), and Inclusive Action for the City (IAC) will each provide complementary lending capital to meet the needs of EOCF LA borrowers.
The other two organizations involved, Vermont Slauson Local Development Corporation (Vermont Slauson) and Pacific Asian Consortium in Employment (PACE) will provide technical assistance and business advising services to EOCF Los Angeles borrowers.
“The EOCF LA is a key component of the inclusive lending model that we have for entrepreneurs that have been left behind,” said Tunua Thrash-Ntuk, Executive Director, LISC LA, who also spoke at the event.
Thrash-Ntuk added, “Partnerships like this one will enable many community stakeholders to get the resources to support small business owners as they look to rebuild, improve their credit, grow their financial stability and hopefully by the end of the journey are thriving sustainable businesses.”
The funding for EOCF Los Angeles is part of JPMorgan Chase’s $30 billion racial equity commitment that is providing economic opportunity to underserved communities, especially the Black and Latino communities, and driving an inclusive economic recovery by focusing on areas like small business growth and financial health.
“We know there is great opportunity to infuse more capital into businesses by partnering closely with local community organizations,” said Porché. “It is going to be difficult to rebuild our Main Streets after the pandemic but one of the best ways that we will be able to start rebuilding will be through programs like this.”