Leading the call for companies to lean in to social justice, Detroit-based financial institution, TCF Bank is putting their money where their mouth is by unveiling a huge financial commitment for minority owned businesses.
Less than two months after pledging to take action for racial equality and social justice in the communities they serve, TCF Bank, today announced a $1 billion loan commitment to minority communities and minority- and women-owned small businesses, and a $10 million grant program to assist low-to-moderate income home buyers.
The 5-year programs are among the first tangible products of a public commitment Detroit Mayor Mike Duggan secured from major corporations in the immediate aftermath of George Floyd’s murder and will impact businesses across TCF’s footprint and the country.
“While small businesses drive the economy and are the backbone of our neighborhoods, minority-owned and women-owned small businesses have historically had a more difficult time obtaining loans than their white and male counterparts. We recognize the crucial need for change, and as a bank committed to strengthening individuals, businesses, and communities, we are inspired to help these business owners create wealth and pursue their dreams,” said TCF Executive Chairman Gary Torgow. “Last month, we joined Mayor Duggan and other business leaders in Detroit and pledged to do our part to fight racism, bigotry and inequality in this country. Today, we take another step in our journey to help create a more equitable future for all.”
It is no secret that Black-owned businesses have long faced challenges in getting financing.
According to a 2019 report published by the Federal Reserve, in 2018, only 31% of Black-owned businesses received the funding they applied for compared to 49% of white-owned businesses, 39% of Asian-owned firms and 35% of Latino-owned businesses.
That same report goes on to state that, 38% of Black-owned small businesses did not receive any of the financing they applied for, compared with 33% of Latino-owned businesses, 24% of Asian-owned businesses and 20% of white-owned businesses.
The reasons for such disparities vary from not being big enough to command the type of attention that larger corporations do (as witnessed during the race to obtain PPP loans during the pandemic) to not having a strong banking relationship to the age old absolute and systemic racism.
Small business owner, Shamai Sampson of Shay’s Beauty Bar has experienced great frustration as she has tried to keep her small business afloat in the midst of COVID-19. “I’ve applied for every type of funding they had earmarked for small businesses with no luck,” she said. “I even sat down with my own bank and was told that i just don’t pass the ‘viability test’ even tho my business has never operated at a loss. Yet I’ve personally known non minorities who have gotten access to funds and they’re in the red.”
But lets be clear even before we had even heard of COVID-19, many small, Black-owned businesses were struggling.
For years, experts have acknowledged that racism in the finance world does exist with many banks not viewing Black-owned businesses as successful. Leaving many companies to prove that are and can pass the viability test. Add to that the restrictions placed on retail, hospitality and personal service businesses in the wake of COVID-19 and a bad situation has gotten worse.
A study from the National Bureau of Economic Research shows that quarantine measures aimed at slowing the spread of the coronavirus has also caused 41% of Black-owned business to shut down between February and April many may not recover from this without access to some type of capital.
“Today, we humbly strengthen our commitment to right historic wrongs, with a loan program audacious in its size and ambition: a $1 billion commitment for minority communities … and for small businesses owned by women and minorities, said Torgow. “With this pledge, small business loans of up to $1 million each will be available across our bank’s footprint. This means dramatically more access to capital for people and communities long denied their fair share.”
With racial tensions at an all time high stemming from the murders of George Floyd, Breonna Taylor and a host of others at the hands of police. Companies are stepping up to do support the sentiment that Black Lives Matters by looking for ways to give minorities equal opportunities and equal access thus helping to change the narrative and lives throughout their communities.
The small business loans of up to $1 million each will be available across TCF’s footprint and nationally to ensure access to credit to minority and women-owned small businesses and small businesses in largely minority communities. The bank will focus its efforts in Detroit, Minneapolis/St. Paul, Chicago, Cleveland, Grand Rapids and other key cities in its markets.
TCF Bank has always been an ally to the community instituting programs like the S.W.A.G (Students Wired to Achieve Greatness) Scholarship Awards that provides scholarships to Detroit students who demonstrate leadership in various areas outside of academics. With a minimum GPA requirement of 2.5 the program is innovative in that it helps students who exhibit promise and potential lessen the financial burden of higher education.
“We are trying to do our part in a billion different ways, said Torgow. “To help realize [Dr. Martin Luther King Jr’s] dream for America: a realization born of optimism and hope – opportunity as its driver … and prosperity as its goal for all.”