Guest blog post submitted by LISC's Jessica Hanmer, Economic Development Lending Manager, and Alyssa Alfonso, Assistant Program Officer
Last year, just before the pandemic became a reality, LISC was in the process of convening stakeholders to develop economic inclusion agendas in South Los Angeles and the Far Eastside in Indianapolis. Each group, which comprised over a dozen community stakeholders and advisors, identified economic challenges and priorities facing their communities. Informed by interviews, surveys, and research, each group developed strategies to address residents’ and small businesses’ structural barriers to accessing opportunity, such as limited access to capital, lack of adequate services, and discriminatory hiring practices. The Wells Fargo Diverse Community Capital Activator grant is providing resources to help bring locally determined plans to fruition.
In South LA, stakeholders identified the prevalence of predatory lending practices, lack of accessible and trusted banking institutions, difficulty securing procurement opportunities, and scarcity of ongoing technical assistance for businesses. From this information, the South LA Economic Inclusion Implementation Plan placed a high priority on increasing small business growth opportunities, as well as expanding outreach efforts to provide tailored technical assistance to help local businesses better compete in bidding processes.
To move the needle in the direction of these long-term goals, LISC LA deployed $3.25 million in capital, supported by the Wells Fargo Activator grant, to two LA-based small business CDFIs that serve the South LA community, one of which was Inclusive Action for the City.
LISC LA invested in Inclusive Action's Semi'a Loan fund (Seed Fund), a microloan program that provides low-interest loans (between 2-3%) to entrepreneurs. Inspired by Inclusive Action's advocacy work alongside street vendors, the Semi’a Fund loan supports business owners who cannot secure capital from traditional lenders yet require support growing or formalizing their businesses.
Through the fund, 11 businesses in South LA have received loans for working capital, equipment purchases, inventory, and past-due business expenses due to COVID-19 hardship. Loans range between $1,000-$15,000 with a repayment term of 12-60 months and a six-month payment deferral, with no application fee or FICO requirements.
Deploying capital to locally-informed CDFIs is an important strategy for supporting small businesses. CDFIs are well positioned to know, understand, and advocate for their borrowers, through more flexible credit boxes and personalized support through the lending process — helping small businesses build credit and assets to sustain and grow their work.
With the Wells Fargo Activator grant, LISC Indianapolis is putting the Economic Inclusion Agenda for the Far Eastside into action alongside stakeholders. Residents and community participants voiced a need for increased community investment by businesses, more resources for small business, greater collaboration, and translation services. Respondents also shared that English as a Second Language classes, job and business training, and community support services would help them overcome challenges and meet their personal goals — ranging from starting small businesses to home ownership and higher education for their families.
LISC Indianapolis is working with Far Eastside organizations to explore the creation of a community-based Business Association that will establish a centralized location for collaboration among area businesses, align workforce development and training partnerships with the Far Eastside Employer Engagement Task Force, and help generate buy-in among anchor employers to hire locally.
The economic inclusion plan also led to the creation of a 10-month Spanish-language small business workshop for Latinx community members to build business acumen and start businesses in the Far Eastside community. Monthly sessions focus on topics from the legal aspects of starting a business to getting XBE certified. Alongside this workshop comes a new Microenterprise Resource Navigator, providing deeper technical assistance to Latinx entrepreneurs for marketing, legal, and accounting needs.
By providing flexible resources, the Wells Fargo Diverse Community Capital Activator grant is supporting two communities to identify and implement locally identified solutions to enhance economic opportunity for residents and small businesses.