By Ellis Carr, President and CEO of Momentus Capital, Capital Impact Partners, and CDC Small Business Finance
Healthy communities are built by their residents. Small business owners, local real estate developers, and other local leaders are the engines of job creation and economic activity in communities across the country. When these leaders have the opportunity to succeed, their communities, their residents – and our country – thrive.
Unfortunately, leaders in communities all across the country are missing a key ingredient to success: access to the capital. For too long, people in underestimated communities and people of color have been denied the types of capital and support they need to realize the dreams they have for themselves, their families and their neighborhoods.
In 2019, Capital Impact Partners and CDC Small Business Financebegan an incredible journey with an ambitious – some might say audacious – goal: to devise new, transformative ways to meet the capital needs in communities across the country. We asked ourselves a question: How does the financial sector – including mission-driven financing organizations in our sector – need to change to really support communities? What can we do differently to help our communities really thrive?
Mindy Christensen recently joined Capital Impact as the new Senior VP of Community Development Real Estate. She leads her team to support Capital Impact’s mission to transform how capital and investments flow into communities by facilitating loan transactions for health care centers, charter schools, affordable housing, healthy food projects, and more. Mindy’s passion for finance and community development has spanned almost 20 years, from working with borrowers taking out a $20 loan from a local non-profit lender to borrowers taking out a $1 billion loan from a traditional bank.
In this blog, we take some time to get to know more about Mindy, her history, and what keeps her committed to building communities of opportunity.
Like 2020, 2021 presented challenges for small business owners, often revealing historical and systemic disinvestment in communities of color. It also created opportunities for businesses to adapt and rebuild.
While communities and businesses are still dealing with the repercussions of the pandemic, we can work together to foster a positive outlook for the year ahead.
With our sister organization CDC Small Business Finance, our team has taken a look at what our community members, partners, and investors may experience in 2022.
Take a look at our predictions for this year and how trends and policies may affect you and others in the community development/small business space.
Over the past 10 years, Capital Impact Partners has invested more than $300 million to foster equitable and inclusive Detroit communities, and we are committed to achieving that vision with the city’s residents. To celebrate our 10th anniversary of working side-by-side with Detroiters, we look back at what worked and the work that remains in a video series with our staff and partners. Watch all the videos in our series here!
During the 1963 March on Washington for Freedom and Jobs, attendees peacefully and constructively protested for the end of systemic barriers and racial segregation. These barriers kept members of disinvested communities from good-paying jobs or from owning businesses wherever they chose, which would allow them to share in the prosperity that others experienced.
Martin Luther King, Jr. gave his most famous speech at the rally, the culmination and continuation of years of organizing communities and politicians to fight for everyone’s dignity to be acknowledged within the system that governs us all.
Fifty-nine years later, after the Great Recession, multiple horrifying and historic experiences of racial violence, and a global pandemic that has disproportionately impacted the same communities that originally marched, Martin Luther King, Jr. ‘s message and dream remain as important as ever.
As we recognize Martin Luther King, Jr.’s impact and civil rights legacy, I am aware of the struggles that our communities continue to face. It frames how our new enterprise is working to change the paradigm to achieve economic justice and wealth building for underestimated communities.
What barriers are underestimated communities facing?
For generations, systemic racism has kept many people of color from achieving even a basic standard of living, including access to social services to help them thrive.
Policies such as redlining and underfunding education for students in communities living with low incomes have kept many in communities of color in a cycle of poverty. Discriminatory practices have resulted in many people of color having limited or no savings; limited or no access to quality health care, insurance, or sick leave; and limited material resources.
For example, studies show that people of color are far more likely to be denied a home loan than a White applicant. The inability to acquire a home loan has far-reaching implications, as wealth and economic stability are intrinsically linked to housing and homeownership.
The trend is similar for business owners of color, as affordable capital is not reaching them.
According to the 2021 Report on Firms Owned by People of Color (PDF), 13 percent of Black-owned firms received all the financing they sought in the 12 months prior to the survey, compared to 40 percent of White-owned firms. 46 percent of Black-owned firms that applied for financing received none of the financing they sought, the largest share of any group when segmented by race. Additionally, only 43 percent of Black-owned firms received all the Paycheck Protection Plan (PPP) funding they sought, the lowest share of any group. Of other small businesses seeking PPP funding, 61 percent of Latino-owned firms received all the PPP funding they sought, Asian-American-owned firms received 68 percent, and White-owned firms received 79 percent.
Together with homeownership, entrepreneurship is another significant path to wealth creation and building, which is why expanding access to capital is crucial for communities to build the economic mobility and prosperity they deserve.
How is our new enterprise fostering economic mobility and wealth creation in underestimated communities?
Mission-driven organizations in particular know how high the stakes are for underestimated communities. Every day, we work hand-in-hand with the same communities that were the center of Dr. King’s life work, to address the issue of equity, build access and opportunity, and remove structural barriers that keep equity and opportunity unreachable for so many to this day.
Fostering systemic change takes both out-of-the-box and holistic thinking to support the community-led solutions .
That is why CDC Small Business Finance and Capital Impact Partners came together to launch a transformative new enterprise and innovate how capital and investments flow into historically disinvested communities to advance economic empowerment and equitable wealth creation.
In the same spirit as all those who attended the March on Washington, we stand with communities and work in a number of ways to create resources to address economic injustice.
Below are some examples of our initiatives to support jobs and equity.
As we celebrate Martin Luther King, Jr. Day, we remember Dr. King as a symbol that represents the quest for equality and nondiscrimination. However, the work is not done, so we follow in his legacy. The work of our enterprise will drive a holistic place-based approach to community and economic development at scale, centered around people and place, to address these legacy issues.
Through our small business lending and advisory services, Wells Fargo Open for Business, the Equitable Development Initiative and the Housing Equity Accelerator Fellowship, and more, we are working to build inclusive and equitable communities by providing people access to the capital and opportunities they deserve. I look forward to working with our neighbors in communities and our partners to achieve the dream that we honor today.
Examples of How Our Enterprise is Advancing Equity & Jobs
Wells Fargo Open for Business
Firms owned by people of color reported more significant negative effects on business revenue, employment, and operations as a result of the COVID-19 pandemic. We received a $1.5 million grant from Wells Fargo to launch an initiative focused on providing targeted business training services to small real estate developers and entrepreneurs of color. The funding is made possible through Wells Fargo’s Open for Business Fund, a roughly $420 million small business recovery effort across the United States to help small business owners recover and emerge from the pandemic.
Nourish DC
The Nourish DC Collaborative was created in partnership with the DC government to support the development of a robust ecosystem of locally owned food businesses, neighborhood vibrancy, and health equity in Washington, DC communities. Nourish DC provides flexible loans, technical assistance, and catalytic grants to emerging and existing food businesses increasing access to healthy food and creating quality jobs in the District of Columbia, with a preference for businesses located in or owned by residents of underserved neighborhoods.
CDC Small Business Finance & Impower Loan Fund
As many as 8,000 small business owners, especially entrepreneurs of color and women, are not able to access affordable and responsible capital to purchase real estate. To help combat this, we offer small business and commercial real estate loans with lower rates and no hidden fees through CDC Small Business Finance.
In particular, our Impower loan provides financing to small business owners who were either declined or did not qualify due to ineligibility for a conventional Small Business Administration (SBA) loan. By offering affordable and responsible capital, we have committed to helping minority business owners and communities thrive.
Equitable Development Initiative
The ability for developers of color to help shape and increase access to affordable housing in rapidly developing cities remains hampered by the fact these individuals remain underrepresented in the real estate development industry. Currently, people of color are estimated to make up less than five percent of the developers in the country.
Our Equitable Development Initiative (EDI) continues to provide opportunities for emerging real estate developers of color, who often find themselves on the sidelines of the industry because of systemic disinvestment and lack of access to funding and networks. Participants receive broad-based training, including project budgeting, real estate finance, project and contractor management, legal services, and community engagement, as well as local mentorship. EDI is expanding nationwide, with services currently available to developers in Detroit, MI; the Washington Metropolitan area; and the San Francisco Bay Area.
The lack of access to capital that developers of color often experience also led us to create our Diversity in Development Loan Funds in Detroit and the Washington Metropolitan region. These funds provide a new tool to increase Capital Impact’s long-time commitment to equitable development and inclusive growth, by deploying low-cost and flexible construction financing to developers of color — with a preference given to graduates of Capital Impact’s Equitable Development Initiative.
Housing Equity Accelerator Fellowship
Expanding on the Equitable Development Initiative, we saw the opportunity to continue to support developers of color to overcome barriers to success. We are excited to support real estate developers of color with another opportunity to access capital and training as part of our new Housing Equity Accelerator Fellowship, a two-year, part-time professional development accelerator program for a cohort of real estate developers with practical experience in the field. Funded by Amazon, the fellowship also increases affordable and workforce housing across the Washington Metropolitan region.
The program further amplifies the ability of these developers to bring their ideas, perspectives, and local partnerships to work being done in the region. As members of their communities, the Fellows will engage with and listen to their communities’ concerns and, through their work, provide greater access to employment and opportunity for local residents.
Welcome to our Spotlight series where we highlight members of our new enterprise with Capital Impact Partners.
Earlier this year we announced the formation of our exciting new enterprise that united Capital Impact Partners and CDC Small Business Finance under a single strategy and leadership team.
We believe that in order to ensure that traditional and mainstream financial systems are equitably serving Black, Hispanic, and Indigenous communities to drive solutions that support economic mobility and wealth creation, we must think differently. This series is designed to introduce you to the many people who are working hard to drive change and create a powerful new voice for communities and small businesses.
In this Spotlight, meet LaKisha Gant. LaKisha is our Senior Vice President of Commercial Real Estate Lending.
Welcome to our Spotlight series where we highlight members of our new enterprise with Capital Impact Partners.
Earlier this year we announced the formation of our exciting new enterprise that united Capital Impact Partners and CDC Small Business Finance under a single strategy and leadership team.
We believe that in order to ensure that traditional and mainstream financial systems are equitably serving Black, Hispanic, and Indigenous communities to drive solutions that support economic mobility and wealth creation, we must think differently. This series is designed to introduce you to the many people who are working hard to drive change and create a powerful new voice for communities and small businesses.
In this Spotlight, meet Shelli Hayman. Shelli is our Senior Vice President of Small Business Lending.
Welcome to our Spotlight series where we highlight members of our new enterprise between CDC Small Business Finance and Capital Impact Partners.
Earlier this year we announced the formation of our exciting new enterprise that united Capital Impact Partners and CDC Small Business Finance under a single strategy and leadership team.
We believe that in order to ensure that traditional and mainstream financial systems are equitably serving Black, Hispanic, and Indigenous communities to drive solutions that support economic mobility and wealth creation, we must think differently. This series is designed to introduce you to the many people who are working hard to drive change and create a powerful new voice for communities and small businesses.
This Spotlight is onKim Dorsett. Kim is our Chief Human Resources Officer.
A decade ago, Detroit was on the verge of a landmark municipal bankruptcy. Emergency response times were among the slowest in the nation. Blight abounded in nearly every neighborhood. In the prior decade, Detroit had lost one-quarter of its population—more than 244,000 residents.
Welcome to our Spotlight series where we highlight members of our new enterprise between CDC Small Business Finance and Capital Impact Partners.
Earlier this year we announced the formation of our exciting new enterprise that united Capital Impact Partners and CDC Small Business Finance under a single strategy and leadership team.
We believe that in order to ensure that traditional and mainstream financial systems are equitably serving Black, Hispanic, and Indigenous communities to drive solutions that support economic mobility and wealth creation, we must think differently. This series is designed to introduce you to the many people who are working hard to drive change and create a powerful new voice for communities and small businesses.
This spotlight is onDiane Borradaile. Diane is our Chief Lending Officer.
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