The National Urban League said it has closed on a $3 million commitment from Charter Communications, funds that will go toward the organization's small business lending arm, the Urban Empowerment Fund.
The commitment is from Charter’s Spectrum Community Investment Loan Fund and will help the Urban Empowerment Fund become a certified community development financial institution (CDFI), which increases its ability to deliver capital to minority-owned small businesses in urban areas. Charter first said it would invest the funds last year.
Charter’s $3 million commitment will be used to make loans to minority-owned businesses. The partnership also includes a $500,000 capacity-building grant for the Urban Empowerment Fund to expand staffing, infrastructure and operations. As a result of the grant and funding commitment, Charter has been designated the Founding Partner of the Urban Empowerment Fund by the National Urban League.
“As the Founding Partner of the UEF, Charter is a game changer in terms of our ability to support the small businesses that are the economic lifeblood and primary employers in struggling urban communities,” National Urban League President and CEO Marc H. Morial said in a press release. “The COVID-19 pandemic both revealed and exacerbated the racial gaps in access to capital for small businesses. With Charter’s support the National Urban League now is better positioned to deliver more funding, more quickly, for the businesses that were most impacted by the crisis.”
The Urban Empowerment Fund provides loans and coaching to minority-owned businesses, but without certification from the U.S. Treasury Department, it must currently work through other intermediary organizations. Certification is expected by the end of the year. Currently, the Urban Empowerment Fund is providing intermediary loans to the National Development Council in support of their participation in the New York Forward Loan Fund. Once certified, the Urban Empowerment Fund will begin providing direct loans to Black and other minority-owned businesses in tandem with select Urban League Entrepreneurship Centers, which are currently operating in 12 Urban League affiliate cities.
“Small business ownership and growth are fundamental to developing and sustaining economic power, which is critical to the long-term success of our communities,” said Charter chairman and CEO Tom Rutledge in a press release. “Building on our valued partnership with the National Urban League, these investments will not only support small diverse-owned businesses through access to much-needed low-interest capital, but also will assist the National Urban League in revitalizing the Urban Empowerment Fund to help build thriving communities across the country.”
Since the pandemic began early last year, 27% of minority-owned businesses were closed compared to 18% of other small businesses, according to the National Urban League, adding that even prior to the outbreak Black-owned businesses were less likely to be approved for loans than their White-owned counterparts. And when they were approved, they received smaller amounts and at higher interest rates, the organization continued.
“Many Black-owned small businesses were locked out of the Paycheck Protection Program because they didn’t have existing relationships with the large banks that administered it,” Morial said in the release. “CDFIs like the Urban Empowerment Fund are the most efficient and effective vehicle for getting these businesses the support they need.”
The Spectrum Community Loan Fund makes up about $18 million of the more than $22 million Charter has committed to date to support small and minority-owned enterprises in economically underserved communities. In addition to the $3 million commitment to the National Urban League’s Urban Empowerment Fund, the Spectrum fund has previously made $1 million investments in CDFIs in New York, Texas, Missouri, California, Wisconsin, and Ohio, as well as $3 million in low-interest loans directly to CDFIs in partnership with and as directed by the National Action Network. Each CDFI also receives a grant to fund technical assistance programs and professional training for small businesses to help establish sound business practices necessary for long-term growth and continuity. Some of these grants have recently been earmarked to support businesses impacted by COVID-19.
