Wells Fargo gave $8.5 million in grants this month to five Chicago nonprofits and community development organizations focused on supporting businesses owned by women and people of color.
The grants are from the bank’s $420 million Open for Business Fund, which the bank has been distributing nationally. To date, San Francisco-based Wells Fargo, which has a large presence in Chicago, says it has helped about 124,000 small businesses keep an estimated 226,000 jobs.
“Early on in the pandemic, Wells Fargo recognized that women and diverse businesses were closing at higher rates and that more capital was going to be needed to support them,” said Mark Lester, a senior vice president and relationship manager in Chicago in Wells Fargo’s government and institutional banking division.
In Chicago, Wells Fargo gave $2 million each to Allies for Community Business, the Chicago Community Loan Fund and the Community Investment Corporation, $464,000 to the Greater Chatham Initiative and $2.1 million to Greenwood Archer Capital.
Brad McConnell, CEO of Allies for Community Business, said a $2 million grant from Wells Fargo has allowed the community lender to provide lower interest rates on its loans. With an office in East Garfield Park at the Hatchery, a food and beverage incubator, Allies for Community Business provides loans and other services to businesses across Illinois and Indiana owned by Black, Latino, female and low-income entrepreneurs.
Last year the organization lent about $400 million to over 22,000 community businesses, and will lend about $325 million by the end of 2021, McConnell said. Individual loans range from $500 to $100,000 and borrowers tend to repay them within two years. Average interest rates are 9%, with a 1% closing rate, but with the new funding from Wells Fargo, Allies for Community Business will provide 3% interest rates for the rest of 2021, McConnell said.
“The businesses we’re seeking to serve are those that have been hardest hit by the pandemic,” McConnell said. Those mainly include restaurants, bars and venues, he said. “It’s really tough for businesses to be able to take on credit when revenues are so uncertain.”
Tyrone Green, owner of Penson & Green Security in Chicago’s Englewood neighborhood, used a $2,500 loan from Allies for Community Business to cover payroll and uniforms for his 10 employees.
“The loan I received from (Allies for Community Business) helped me secure what I needed to get the business back up and running, full steam ahead,” Green said in a statement.
The Greater Chatham Initiative is using the financing to launch a third FoodLab program, which aims to cultivate South Side restaurants. GCI, founded in 2016, provides assistance in Avalon Park, Auburn Gresham, Chatham and Greater Grand Crossing.
“We decided to focus on food-based businesses because there was a need for technical assistance,” said Nedra Fears, the executive director of GCI.
Over the course of the COVID-19 pandemic, GCI helped local restaurants digitize to offer online ordering and delivery. GCI also provides educational resources to restaurant owners on business fundamentals and profit strategies and connects them with available grants and loans.
Past cohort members have seen their staffs grow 36%, with some members seeing revenue increases up to 63%, according to data from GCI. Restaurants in the program have included the Harold’s Fried Chicken location at 407 E. 75th St., the Woodlawn site at 1200 E. 79th St., and Mabe’s Deli at 312 E. 75th St.
Wells Fargo, which employs 3,100 people in Illinois, isn’t the only large bank to recently provide grants to community funds and organizations. Last week, PNC Financial Services gave $1.5 million to help launch the Community Micro Equity Fund, which is connecting 200 qualified business owners and entrepreneurs with equity investments of up to $25,000.
“I think the financial community and big banks are being asked to step up,” Lester said. “We hope that the money will be used and help provide some stability and growth to those organizations.”