As part of Mayor Jerry Dyer’s One Fresno mission to build a more prosperous and inclusive city, the City of Fresno (COF) Mayor’s Office of Economic Development today announced a partnership with the Fresno Metro Black Chamber of Commerce (FMBCC) to launch a first-of-its-kind-in-Fresno “microfinancing” platform that will fill a much-needed gap in the city’s lending ecosystem.
Kiva is an internationally renowned nonprofit lending platform that helps small business owners crowdfund 0% loans of $1,000-$15,000. The online platform helps to promote individual business to an international marketplace of lenders who can support the business with a loan of as little as $25.
The launch of the Kiva fund is the product of the City of Fresno’s involvement with the National League of Cities (NLC) City Innovation Ecosystems program, joining 8 other cities across the country that committed this year to promoting inclusive economic development by launching a local Kiva fund. The City recruited the FMBCC as its local partner to launch and operate the fund; the City will serve as a “trustee”, helping to source both matching funds and to identify and “endorse” local entrepreneurs that can benefit from Kiva’s capital.
“We are grateful for the help of the National League of Cities in bringing Kiva to Fresno,” said Mayor Jerry Dyer. “This platform will be an important tool to opening new channels to capital and making One Fresno work for all our small businesses.”
Sarah Adeel, head of Strategic Partnerships for Kiva US, said: “Fresno sets a great model where a local organization works with Kiva, is supported by the government and other local stakeholders like NLC. It’s the most innovative way to offer financial inclusion to their small businesses, especially those rejected by other financial institutions. Together we can help scale the impact through multiple stakeholders focused on solving a problem together, as well as building a strong local lending community – a bank of people.”
By supporting the launch of the fund and the participating businesses, the Mayor’s Office of Economic Development is recognizing the dire need for access to capital of Fresno small businesses, especially those owned by women and people of color. While the Kiva fund in Fresno will be open to all Fresno entrepreneurs, the FMBCC and COF will focus outreach efforts on BIPOC businesses and those operating in Opportunity Zones in recognition of the extraordinary challenges faced in these communities to access capital and Fresno’s historically poor performance in economic inclusion. Opportunity Zones are census tracts identified as underserved due to concentrated levels of poverty.
“One of the key impediments to a thriving small business environment is the health of companies owned by BIPOC business owners. It’s our job to make sure that entrepreneurs in every neighborhood have access to the capital they need to survive and scale their businesses. Fresno’s ethnic chambers of commerce like FMBCC have the closest relationships to the diverse community of entrepreneurs we seek to support,” said Economic Development Director Lupe Perez.
The FMBCC already leads several initiatives to support early business concepts, hands-on back-office support and technical assistance to help existing businesses scale, and a flexible pool of capital to directly address the unique capital challenges for small businesses owned by women and people of color.
FMBCC CEO Tara Lynn Gray was also the workgroup sponsor of the “Betting Big on Small Businesses Owned by Woman and People of Color” strategy included in the portfolio of 19 unique initiatives identified and articulated as part of the Fresno DRIVE Community Investment Plan. Ms. Gray has just been appointed director of the California Office of the Small Business Advocate. Dr. Cassandra Little will succeed Gray as the interim CEO of the FMBCC. Richard Keyes is the Capital Access Manager for the FMBCC Kiva Hub.
By working as a trustee of the new Kiva fund to be operated by the FMBCC, the City of Fresno is aligning its One Fresno economic development strategy with the Betting Big initiative.
The Betting Big executive plan reported that employers with fewer than 100 employees account for nearly 40% of total employment in the Fresno region but that existing institutional financial resources are failing to serve BIPOC small businesses.
“When our workgroup wrote the Betting Big proposal, we found that White small business owners account for 65-70% of all firms with paid employees in Fresno despite the fact that Fresno is a majority Black, Latino, and Asian metropolitan region. Black small business owners, for example, account for only 2% of businesses with paid employees, despite Black residents representing nearly triple that share of the overall population,” said Tara Lynn Gray.
The Kiva Hub aims to address this disparity by providing a crowdfunding option to business owners that currently fall through the cracks of the existing lending ecosystem.
The Fresno Kiva Hub will accept its first loan applications in April 2021.
The Fresno Kiva Hub is the third business financing initiative launched by the City of Fresno since the beginning of the COVID-19 crisis to support inclusive economic recovery. The Save our Small Businesses program deployed $4,650,000 in working capital grants to businesses with 1-25 employees in 2020.
COF also launched in October an $830,000 Business Recovery Fund for businesses that have been severely impacted by the COVID-19 crisis, yet still turned down for traditional financing. The loans are available from $10,000 to $100,000 at low fixed rates and terms from 5-10 years and may be used to rehire employees or to cover the cost of social distancing measures and other public health precautions. The Revolving Loan Fund (RLF) was created last year through CARES Act Recovery Assistance from the U.S. Department of Commerce’s Economic Development Administration (EDA).
All businesses located in the City of Fresno that have been negatively impacted by the COVID-19 pandemic are eligible to apply through the Cen Cal Business Finance Group, which is administering the RLF. The Mayor’s Office of Economic Development has focused its promotional efforts on underserved neighborhoods and minority business owners including through outreach efforts conducted with the Fresno Area Hispanic Foundation and the Fresno Asian Business Institute and Resource Center.
To date, the city has approved and committed $382,000 in total loans to 6 separate borrowers, representing a total of 193 jobs impacted:
- Coffeehouse Manufacturer: Hispanic-owned; downtown Fresno (Broadway/Ventura); 4 jobs
- Bridal Shop: Hispanic-owned; SE Fresno (Belmont/Maple); 1 job
- Elderly Care Facility: Asian-owned; NE Fresno (Shepherd/Maple); 8 jobs
- Behavioral Health Therapy Business: Black-owned; downtown Fresno (Merced/O Street); 5 jobs
- Construction Company: Hispanic-owned; SE Fresno (Clinton/Chestnut); 15-25 jobs (seasonal)
- Mental Health Service Provider: White-owned; NE Fresno (Shaw/Cedar); 150 jobs
Rick Keyes, Capital Access Manager, Fresno Metro Black Chamber of Commerce
Sarah Adell, Strategic Partnerships, Kiva US
Founded in 2005 in San Francisco and known as the “missing micro”, the Kiva platform has lent $1.4 billion since inception; it currently provides $2.5 million in loans every week to small businesses in more than 80 countries. The fund boasts a historical repayment rate of 97%. There are currently 34 Kiva hubs operating in the U.S. The Fresno hub will be the fourth in California. https://kiva.org
The Fresno Metro Black Chamber of Commerce (FMBCC) is a membership organization with a global reach advancing the interests of the greater African-American community through the creation of opportunities, advocacy, and business & economic development. FMBCC also provides educational programming for entrepreneurs of all ages that leads to financial responsibility, sustainability, and job growth. https://www.fmbcc.com/
The National League of Cities (NLC) is the voice of America’s cities, towns, and villages, representing more than 200 million people. NLC works to strengthen local leadership, influence federal policy and drive innovative solutions. Its City Innovation Ecosystems program asks city leaders to commit to creating the right policies, programs, and practices to ensure their communities can thrive in the global, innovation-driven economy, and it helps participating cities reach their goals by providing technical assistance, seed funding, and peer learning.
Cen Cal Business Finance Group underwrites and administers lending programs for the Small Business Administration and the City of Fresno. https://cencalfinance.com/city-of-fresno-business-recovery-loan/