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Originally Published: March 18, 2012 8:00 PM  Modified: March 18, 2012 9:00 PM

$2.4M backs initiative to provide biz training for 3 Detroit neighborhoods

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Tobocman

A new effort is directing support to an often-ignored category of entrepreneurs: "underground" microenterprises in three of Detroit's immigrant and impoverished neighborhoods.

The Global Detroit Neighborhood Development Collaborative will provide training and microloans to grassroots purveyors of goods and services such as catering, automotive repair, haircuts and janitorial or construction services in Detroit's north end, southwest and western Cody-Rouge neighborhoods.

The goal of the three-year program is to help create businesses that will improve incomes for neighborhood residents while building the local tax base.

"The census data often doesn't track all the economic hours and entrepreneurism flowing through ... low-income, African-American and immigrant communities," said former state representative Steve Tobocman, who serves as director of the larger Global Detroit initiative, which is administered by the Detroit Regional Chamber and is leading work on the neighborhood initiative.

Those neighborhoods are often some of the most difficult to reach for economic development initiatives, he said.

The Global Detroit Neighborhood project aims to help meet grassroots entrepreneurs "where they are and give them the tools they need to build the American dream by growing their business and doing the things that are necessary to get access to loan funds," Tobocman said.

"If you look at who's getting the jobs, who is making the profits and where the jobs are being located, that's what makes this work so powerful."

Based on a highly successful model launched 19 years ago in Minneapolis-St. Paul by the Neighborhood Development Center, the Detroit initiative will rely on community organizations to help identify entrepreneurs in each community and to get them engaged in training.

The effort hopes to train more than 600 people from the neighborhoods over the next three years and create at least 60 businesses.

Backing the effort is $2.1 million from the Battle Creek-based W.K. Kellogg Foundation and another $335,000 from the New Economy Initiative.

About $300,000 will go to fund microloans of $2,000-$10,000, said Tim Thorland, executive director of Southwest Housing Solutions, which is administering the program.

The remainder of the grant money will go to fund the purchase of the Neighborhood Development Center's training program, coordinating staff at Southwest Housing and working with community development organizations to strengthen their operations so they can provide the program's training.

Southwest is recruiting community development corporations that have won residents' trust in the three neighborhoods and can help identify local entrepreneurs for the training and provide it.

In the north end, where there is a large population of low-income African-Americans, the collaborative is talking with Vanguard Community Development Corp., Central Detroit Christian Community Development Corp. and Focus: Hope, Tobocman said.

In Cody-Rouge, where there's a strong Arab-American demographic, it's talking with Arab Community Center for Economic & Social Services. And in southwest Detroit, where there's a large Hispanic population, it's in talks with the Southwest Detroit Business Association, SER Metro Detroit, Latino Family Services, the Consortium of Hispanic Agencies, Society of Hispanic Business Owners and Professionals and the Michigan Hispanic Chamber of Commerce, he said.

"If we can help get 600 people engaged in training classes and help 10 to 15 percent of them start a business ... that helps beget jobs ... creates payroll for those individuals (and) starts to contribute to the regional economy," Southwest's Thorland said.

The initiative is being finalized but could call for 20 weeks worth of training that begins in a group setting and changes to one-on-one sessions, Thorland said. While some who sign on may have nothing more than an idea that needs to be moved to achievable goals, others may have a microenterprise but need to perfect a business plan, he said.

The grassroots nature of the program is what drew Kellogg's funding, said program officer Linda Jo Doctor.

"While many other efforts focus on funding and training immigrants with high-tech expertise, Kellogg thought it was important to foster grassroots microenterprises, people who are on low wages, who have been living in those neighborhoods for long periods of time," she said.

"We'd like to see more opportunities for low-wage workers so they ... (can) benefit in the (development) ... happening in Detroit."

The Minneapolis-St. Paul effort has trained 4,000 residents of immigrant and low-income neighborhoods since its 1993 inception.

Those entrepreneurs were doing hair, auto repair, cakes or child care out of their homes, making up a "kind of an informal economy underground," said Mihailo Temali, founder, president and CEO of the Neighborhood Development Center.

Of the total in training, about 800 started businesses and the other 80 percent learned "the easy, inexpensive way that their business concept was not a viable idea at this point," Temali said.

According to the Amherst H. Wilder Foundation's biennial evaluation of the program in April 2011, there were 468 businesses launched from trainees operating at that point, he said.

Those businesses annually returned $68 million to the economy in the form of payroll, business expenses, taxes and rent, yielding a 64 percent return on investment for the project.

The payroll, property and sales taxes, alone, paid by those businesses pays back the program's cost every 18 months, Temali said.

To date, the program has spawned 550 businesses that collectively employ 2,000 people.

Entrepreneurs in immigrant and low-income neighborhoods have a variety of barriers to building a business, "but they have the most essential ingredient of all, which is entrepreneurial talent and energy," Temali said.

Sherri Welch: (313) 446-1694, swelch@crain.com. Twitter: @sherriwelch


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