Black businesses are positively impacting Wells Fargo’s bottom line after the pandemic

In a serious recent development driven by mostly Black businesses, a fund launched by Wells Fargo during the pandemic has generated a complete economic impact of $2.1 billion nationwide, based on data fresh evaluation.

The impact comes on the heels of a roughly $420 million knock-on effect from the San Francisco-based banking and financial services giant Open for Business Fund, which launched at the height of COVID-19 about 4 years ago. The funding has enabled greater than 200 nonprofits across the country to supply emergency capital and expertise to 1000’s of local businesses hardest hit by the pandemic.

Since 2020, grantees report that OBF has helped greater than 336,000 small businesses. It has reportedly helped them retain or create greater than 461,000 jobs in U.S. communities.

Nearly 80% of the funds went to businesses with racially or ethnically diverse owners, 72% to low- and moderate-income businesses, and 53% to women-owned businesses.

The review comes after Wells Fargo was criticized and hit with hefty fines for its lending practices lately. The bank has also made an enormous push to assist individuals and businesses in the black community.

His Open for Business Fund elevated small businesses through grants, loans, and community group training. He said most of the businesses he supported had lower than $1 million in revenue and ten or fewer employees.

The knock-on effect occurred as corporations used their funds to leverage private and non-private investment. Some community development financial institutions (CDFIs) created recent kinds of loans, while other recipients restructured existing small business debt to assist clients gain recent growth opportunities.

The bank said the program’s priority is to succeed in small business owners who often struggle to access capital and expertise to sustain their livelihoods and the small business ecosystem.

The report also revealed one other intriguing narrative: Diversified and low-profit businesses are not typically seen as job creators or wealth generators, but the evaluation showed the opposite.

Darlene Goins, head of philanthropy and community impact at Wells Fargo, shared in an email what OFB has done to take Black-owned businesses to the next level. She says the firm has helped businesses stay open, retain jobs and grow.

Goins said the fund has worked with community organizations to supply capital, expertise and asset ownership strategies for small business owners, including helping them purchase real estate or equipment. Providing technical assistance has also been key, she added. Small business owners have sought guidance on applying for loans, accessing federal and state funding, pivoting their business or transitioning to a web-based service model.

Julius “Eddie” Lofton, owner of JC Lofton Tailors in Washington, D.C., reflected on how the fund has helped his black-owned business. Wells Fargo says he’s a seasoned tailor who runs a family business that his grandfather began in the Thirties. Lofton received a $10,000 grant in 2020 through the Local Initiatives Support Corp. (LISC). His business now employs eight people, and its storefront has since been renovated.

“At the time, we were stressed about keeping the lights on and keeping our employees like family. When I got the $10,000 grant, it lifted my burden and I knew I would be keeping my family’s legacy alive.”

Another company, Chiropractic Hub in Atlanta, received a $100,000 loan from Invest Atlanta, an economic development firm in the city. Co-owner Dr. Dara Geiger and co-founder Dr. Mesiha Miller run Chiropractic Hub. The funding helped launch their company, which the entrepreneurs call “the world’s first chiropractic coworking space.”

“Funding was critical to opening our practice and securing the infrastructure and equipment needed to be successful,” Geiger told Wells Fargo. “Without it, our practice opening would have been significantly delayed. Now, our vision of a coworking space where physicians can build a patient base and collaborate on patient care is a reality for the community.”

Goins believes now could be the time for Black entrepreneurs and aspiring small business owners to partner with CDFIs and technical assistance providers, corresponding to local universities and business development centers, in addition to some Wells Fargo grant recipients, corresponding to LEAF, I’m going up or Small Business Resource Navigator.

Goins says the fund is now focused on helping small business owners own assets in five cities — Atlanta, Charlotte, Houston, Los Angeles and Michigan. “By working with grantees there, our funding enables entrepreneurs to purchase or upgrade commercial real estate, buy equipment or invest in technology to grow.”

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