Wells Fargo recently announced a $20 million donation to help Los Angeles small business owners own more of their businesses’ assets, including property and equipment. LISC LA (Local Initiatives Support Corporation, Los Angeles) will distribute the funding as a mix of grants and loans in Los Angeles County, with a focus on diverse-led small businesses that have historically been underfunded.
The donation comes from Wells Fargo’s Open for Business Fund, a roughly $420 million fund that the company created in July 2020 to help small businesses stay open during the COVID-19 pandemic. The fund has focused on racially and ethnically diverse small businesses across the U.S., which have been disproportionately impacted by the pandemic. The fund was created from the gross processing fees that Wells Fargo made from administering Paycheck Protection Program loans in 2020. Wells Fargo has worked with Community Development Financial Institutions (CDFIs) and local nonprofits across the nation to distribute funding.
“Fostering an inclusive economic recovery and helping small businesses persevere in the wake of COVID-19 is a priority for us,” said Charlie Scharf, Wells Fargo’s CEO. “As a company, we have a commitment to make the communities where we operate stronger, and to do it at a very local level.”
LISC LA, in collaboration with Inclusive Action for the City (IAC), will administer the $20 million grant in four ways:
— Acquisition Assistance: 0 percent interest, forgivable amount up to $500,000 per small business owner to help purchase property in business districts.
— Growth capital: Growth capital of up to $250,000 with longer than usual repayment terms, to help small businesses fill the ‘friends and family’ financing gap and acquire key assets such as equipment and technology.
— Microloans: Low-cost, micro-loans up to $30,000 with interest rates capped at 3 percent to purchase assets.
— Grants: Cash grants of up to $5,000 for approximately 150 small businesses making $300,000 or less in annual revenue, to help smaller businesses return to thriving.
“The Open for Business Fund program helped us feel hopeful about the future,” said Tony Jolly, co-owner with Tina Amin of the Hot & Cool Café in Leimert Park, who worked with LISC LA as part of a previous Open for Business Fund grant. “We have a promising business we can move forward and new ideas to strengthen the community. Within spaces like ours, connections lead to community action.”
Jolly and Amin aim to grow their business and add jobs to the community by starting a mobile coffee cart program where formerly incarcerated individuals can learn entrepreneur skills.
“Despite diverse small businesses being the cornerstone of Los Angeles’ economy, many remain undercapitalized and lack the support network for business growth,” said Tunua Thrash-Ntuk, executive director of LISC LA. “This incredibly generous gift from Wells Fargo will help LISC LA continue our efforts to close the racial wealth and opportunity gaps in our community and expand on our work to invest directly in diverse entrepreneurs and provide them with the necessary support they so often do not receive.”
Los Angeles small business owners interested in learning more about the program can find information www.lisc.org/los-angeles/abc-fund/. Wells Fargo also offers a Small Business Resource Center where entrepreneurs can explore business planning, financing considerations and practical advice.