Wells Fargo today announced a $ 20 million pledge to help start and grow ethnically diverse small businesses in Charlotte.
The funding, administered in the form of grants through the Foundation for the Carolinas as part of the Mayor’s Racial Equity Initiative, is expected to reach 1,000 businesses over the next three years, starting in 2022.
Wells Fargo said the money will be returned to small businesses to acquire assets such as storefronts, equipment and technology. Priority will be given to companies located in the six corridors of opportunity.
“If I could wake up every morning and have an event like this,” Mayor Vi Lyles told the Harvey B. Gantt Center on Friday. She added that today’s announcement would not have been possible without Charlotte’s long history of public / private partnerships.
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“When people ask what’s the secret sauce? It’s not McDonald’sâ¦ or anything like that, âLyles said. âIt really is the secret sauce that we need to be able to collaborate and work together to change and keep our city strong. “
The bank’s donation will come from a $ 420 million open business fund that Wells Fargo established using fees it collected for loan administration from the federal paycheck protection program. The fund has focused on helping racially and ethnically diverse small businesses disproportionately affected by the Covid-19 pandemic.
Wells Fargo CEO Charlie Scharf said Charlotte’s pledge is one of the biggest the fund has made.
âWe are proud to do this in Charlotte, where Wells Fargo has more employees than any other city, and to do it with important local partners,â he said. âWe look forward to replicating this model in other cities next year. “
Scharf said helping small businesses survive the pandemic was an important goal for Wells Fargo. And by distributing the money in the form of grants and not loans, he said, the bank seeks to “maximize its impact”.
Why is this important
According to a Washington Post Analysis released in August, some of America’s biggest companies pledged $ 50 billion last year to address racial inequality issues in the United States. Many of these promises were made the day after George Floyd was murdered by a Minneapolis police officer.
The civil unrest that followed Floyd’s death, combined with the disproportionate impact the Covid-19 pandemic has had on communities of color, appeared to sensitize corporate boards of directors to the need to address disparities long-standing racialism across the country.
One of the biggest disparities, according to economists, is the racial wealth gap.
By some estimates, the net worth of a typical white family in the United States is nearly ten times that of a black family. In turn, economists say that wealth inequality invariably leads to other racial disparities, including disparity in corporate ownership.
Seeking to specifically help minority-owned businesses, Wells Fargo has joined a growing list of corporate and philanthropic donors.
Last month, Fifth Third Bank announced a $ 20 million pledge to help economic development in Historic West Charlotte. Much of this money will be used to make small business loans.
Three in four small business owners (74%) say owning their physical assets or improving the equity in their assets is a top priority, according to a 2021 survey by Morning Consult.
Fifty-seven percent said owning all of their physical assets debt-free would dramatically improve the financial health of their businesses.
Charlotte Mayor Vi Lyles’ racial equity initiative, announced earlier this month, seeks to raise $ 250 million to tackle systemic inequalities in Charlotte. The initiative was launched with $ 196 million in pledges from some of the region’s largest companies, including Bank of America, Atrium Health, Truist, Lowe’s and Duke Energy.
The money will be used to address social and economic disparities in Charlotte’s “corridors of opportunity” – six areas of the city where crime, unemployment and poverty are disproportionate.
In Friday’s announcement, Michael Marsicano, president and CEO, Foundation For The Carolinas, called Wells Fargo’s $ 20 million donation “forward thinking.”
Adding: it’s up to the âvanguardâ to reshape the way American society overcomes decades of inequality and inequality in access to capital.
âI cannot stress enough that we will be making capital available in the form of grants and not loans,â Marsicano said. âWith grants, you immediately add to a company’s balance sheet compared to loans that increase finance costs. In other words, create direct pathways to wealth creation.
Who is eligible
During the event, Wells Fargo also spotlighted local entrepreneurs who have already won grants through the company’s Open for Business initiative, such as Edmund Washington and Tracey Greene-Washington, owner of two No Grease! Barber franchises in Charlotte.
Business owners have testified to how Wells Fargo’s help has allowed them to keep their businesses going during the pandemic and growing.
Edmund Washington said they plan to open 100 barber shops over the next ten years. Not only that, they want to own the technology to operate and real estate their locations.
A trained tech professional, he said, âIt’s not just a barbershop; it’s a technology company. This is the vision.
Small business grants will target three broad categories:
- New businesses: people who need capital to formalize a small business – such as a painter who needs to buy a van, ladders, and equipment – and people who change careers and start a small business for the first time times.
- Stabilizer businesses: people who need money to stabilize a business emerging from the pandemic, such as a restaurateur who wants to buy physical space to avoid paying rent.
- Growing Businesses: Small business owners who need funds to develop an already successful business, such as a business that needs equipment to increase production or a warehouse to store inventory.
For more information on this new program, visit fftc.org/WellsFargoGrants.
QCity Metro editor-in-chief Glenn H. Burkins contributed to this report.
This story has been updated.