JPMorgan Chase & Co. awarded $500,000 to a ProsperUS Detroit program that provides loans to minority and neighborhood-based small businesses which often find it difficult to access the capital they need to start or expand their promising enterprises.
The grant to ProsperUS’ Sustainable Loan Program for Neighborhood Entrepreneurs will generate 18 loans to small businesses, resulting in the creation or retention of 60 jobs.
“We are deeply appreciative of this generous grant from JPMorgan Chase,” said Hector Hernandez, Executive Director of Southwest Economic Solutions, where ProsperUS is based. “Our loan fund has been very successful in assisting small businesses, but the fund was nearly exhausted. This grant will allow many more entrepreneurs in underserved neighborhoods the opportunity they desire and deserve to grow their businesses and equitably participate in the economic revitalization of our community.”
In the last four years, ProsperUS has approved $1.15M in loans to 63 small businesses, with a particular emphasis on assisting immigrant entrepreneurs and entrepreneurs of color, which is a defining feature of the ProsperUS model. The average credit score for the borrowers was 600, and their average net worth was only about $4,000. Loans vary in terms, structure and payment schedules depending on the borrowers’ business requirements. The average loan amount was $19,000.
“The ProsperUS lending program addresses a significant need for neighborhood-based entrepreneurs,” said Chanell Scott Contreras, Director of ProsperUS. “For entrepreneurs who are traditionally considered ‘high-risk’ borrowers, access to capital continues to be a challenge in Detroit. ProsperUS fills this critical gap.”
In addition to capitalizing the loan fund, the investment from JPMorgan Chase will also fund business and technical support services provided to loan recipients before and after the loan awards. These services include accounting software and training, marketing and social media development, and hiring assistance. The services increase the likelihood of the ProsperUS-financed business succeeding.
“There are approximately 50,000 minority-owned small businesses in Detroit, making it the fourth largest city for minority entrepreneurship. Providing these businesses with what they need to thrive – like greater access to capital and business assistance, allows them to grow, hire locally and expand the local economy,” said Whitney Smith, Head of Midwest Philanthropy, JPMorgan Chase. “We’re proud to partner with Southwest Solutions to create more opportunity for more people as we work together on Detroit’s larger economic recovery.”
ProsperUS began in 2012 with the goal of training and supporting low to moderate income Detroiters wanting to establish small businesses in Detroit neighborhoods. To date, ProsperUS has trained and graduated more than 850 participants. In total, ProsperUS has supported the launch or growth of 213 businesses and the creation of 305 jobs.
Jennifer Lyle, owner of Lush Yummies Pie Company, graduated from the ProsperUS training program and also received a ProsperUS loan to buy new equipment for her commercial kitchen after a local chain of gourmet supermarkets decided to stock her pies.
“The loan from ProsperUS was super-useful and the approval process was very quick,” Jennifer said. “The loan certainly came at the right time to help me ramp up my production and efficiency to meet the growing demand for our pies.”
Lush Yummies currently employs five people. It will be tripling its number of employees next year when it begins supplying more than 120 additional stores.