The Columbus Foundation has provided $2.6 million in low-interest loans to five Black-owned and Black-led businesses as part of a new effort to close the racial wealth gap in central Ohio.
Aventi Enterprises, Embedded Services, The Mezzanine Fund, Our Hospitality Group and Prospera Advisory Group are the first to receive funding from the foundation’s new Equitable Small Business Fund, which aims to increase access to capital and services for entrepreneurs of color.
The foundation launched the fund in May. It committed $5 million to what it called project-related investments made by foundations in local communities. In this case, the foundation is providing below-market loans to minority-owned and led businesses.
“Small business owners need access to capital to grow their businesses. Yet, historically, entrepreneurs of color have faced systemic barriers when trying to access capital, and today they continue to face many of the same barriers,” said the foundation’s president and Chief Executive Officer Douglas Kridler (Douglas F. Kridler) said at a news conference.
According to the foundation and Next Street, white entrepreneurs attract 17 times more equity capital than black and Hispanic entrepreneurs. Black business owners are also approved to receive financing at one-third the rate of white business owners.
Government and bank small business lending programs are also not distributed equitably in Columbus, according to the two groups, which target mostly high-income white neighborhoods.
Charisse Conanan Johnson, one of Next Street’s co-CEOs, said the loan from the Columbus Foundation is one of many ways community foundations across the country are taking to address business inequality.
“The solution required is a holistic solution that involves stakeholders in various fields,” she said.
The foundation convened a committee of Columbus small business leaders to evaluate which businesses should receive the money.
“The data shows that the small business ecosystem is extremely challenging for Black-led businesses to obtain loans,” said Steven Moore, the foundation’s chief of staff.
The idea behind the scheme, he said, is that if the loan is repaid, the money can be refinanced over and over again.
The foundation did not disclose the loan amount or the interest rate recipients paid, but if divided evenly, the loan amount would amount to $520,000 per recipient.
For the first round of lending, the foundation selected proven success stories that could leverage capital to accelerate growth, he said.
“The strategy behind this is not speculation. These are established players with track records,” Moore said.
Companies receiving funding are:
- Aventi Enterprises will use its loan proceeds to provide microloans to women and minority businesses in Columbus to accelerate their growth.
- Embedded Services is designed to enable technology businesses to achieve sustainable growth through partnerships.
- The Cleveland-based mezzanine fund aims to transform the traditional financing system to foster a larger ecosystem of diverse companies. The company will focus on Franklin County.
- Our Hospitality Group, a restaurant group, opened a Black-owned restaurant, Marvin’s, in the Brewery District in July.
- Prospera Advisory Group provides real estate-backed loans to small business owners and real estate investors who do not qualify for conventional financing.