CINCINNATI – The Cincinnati USA Regional Chamber’s Minority Business Accelerator has a new tool to help local minority-owned businesses grow bigger and stronger.
The MBA raised $1.7 million to launch the first phase of the L. Ross Love GrowthBridge Fund, which will provide flexible loans to finance growth projects for established African-American- and Hispanic-owned companies in the region.
The average loan size will be $175,000, and the MBA expects to make three to four loans per year starting this year, said Crystal German, the chamber’s vice president of the MBA and economic inclusion.
“This isn’t a handout. It’s not a donation. It’s an investment in our Greater Cincinnati community,” said Amy Hanson, executive vice president for credit, real estate and financial services for Macy’s, Inc.
“We want those diverse companies to grow and to improve the local economy so this is all about that.”
Macy’s is one of 28 corporations, foundations and other organizations that have invested in the fund. The MBA has raised $1.7 million so far and is continuing to take investments through July 31. The goal is to raise at least $2 million.
Doing Good And Doing Well
Other investors include the Greater Cincinnati Foundation, which made a $500,000 investment, and the Cincinnati USA Regional Chamber, which made a $150,000 investment.
Loans will be made to businesses for a period of five to seven years, German said, and the MBA is estimating a return of at least 3 percent to 4 percent.
“We’re saying to our investors, you can do something good and do well financially at the same time,” she said. “They’ve see the MBA has had great success, and this was always part of the conversation.”
That’s what appealed to the Greater Cincinnati Foundation, said Robert Killins, the foundation’s program director for vibrant places.
“While we felt any type of investment in a business fund like this is risky, that risk is mitigated somewhat by the fact that these businesses have a track record as successful businesses already and because they’re getting technical assistance from the MBA,” he said. “It’s a risk we felt is worth taking.”
Catholic Health Partners invested $100,000 in the fund because it was so closely aligned with the organization’s commitment to strengthen the community and support diversity initiatives, said Jerry Judd, CHP’s vice president, treasury.
“We hope that all the money is used and that it goes to good organizations and that it meets their needs and helps minority-owned businesses remain on a good growth path that helps the economic prosperity of Cincinnati,” he said.
The MBA announced its plan to create the fund in June 2013. Officials believe this is the first fund of its kind in the nation.
Honoring Love’s Legacy
The fund is named for the late Ross Love, an entrepreneur, philanthropist and former Procter & Gamble Co. executive. Love was founder of Blue Chip Broadcasting and also created Blue Chip Enterprises, which helped African-Americans start their own businesses.
His brother, Steve Love, told WCPO that the entire Love family considers the fund’s name “a great honor.”
“Ross really believed in wealth creation in the African-American community,” Steve Love said. "He felt that providing investment with small companies, in particular, not only would create greater wealth with the owners, but it also would create jobs and therefore create in our communities a sense of greater wealth through greater employment."
In that way, he said, the fund is very much following in Ross Love's footsteps.
The $1.7 million the MBA has raised so far will allow the organization to start accepting online applications for the loans starting Feb. 4. Companies that apply do not have to be part of the MBA's portfolio of companies, but they do have to be African-American- or Hispanic-owned, well established and based in the region, German said.
For more stories by Lucy May, go to www.wcpo.com/may . Follow her on Twitter @LucyMayCincy.