Amid an increased push to spur business growth among Detroit women and communities of color, those entrepreneurs could soon find themselves with another avenue for startup capital.
Michigan Women Forward, a Detroit-based nonprofit women’s advocacy organization, has long played a role in spurring business creation with various lending programs. Now it has begun the process of scaling up those efforts and becoming a Community Development Finance Institution, or CDFI. The mission-focused lending organizations are typically focused on low-to-moderate income areas and certified by the U.S. Department of Treasury.
In doing so, the organization hopes to over time have a fund of $10 million to provide small loans of less than $50,000 each to a wide variety of needed businesses in Detroit neighborhoods.
MWF’s initial five-year goal — through 2024 — is to fund 1,268 new women-owned businesses, with at least 65 percent of those loans to women of color.
Michigan Women Forward President and CEO Carolyn Cassin, 68, told Crain’s that the nonprofit organization has been growing toward expanding its lending capabilities for years and had a small business relief fund in place this past spring as the COVID-19 pandemic wreaked economic turmoil.
By getting designated as a CDFI, Michigan Women Forward will be able to expand its lending capabilities, tapping funds from community foundations and the federal CDFI Fund.
Cassin said the organization has been doing some community outreach in recent years and saw a clear and present need for an enhanced scale of lending.
“(What) we heard from entrepreneurs is that we need to do this in a on a much larger scale,” Cassin said. “This was very needed; we can make a huge difference, we can add a lot of value to Detroit.”
The organization is at the start of the application process and expects to send in its materials for certification later this fall. MWF said it expects certification to take approximately 90 days and it would be lending by shortly after the first of next year.
To help get the nascent CDFI off the ground, the nonprofit was able to look within its own organization to find an expert in the process. MWF has hired Alexis Dishman to be its chief lending officer.
Dishman, 42, is a member of MWF’s board of directors, a 2013 Crain’s 40 under 40 honoree and a veteran CDFI and banking executive. Most recently, Dishman was managing director of lending for Michigan and Ohio for IFF, a CDFI with an office in Detroit where she provided the lending team’s strategic direction.
Dishman said she sees a “spectrum of capital” available for would-be entrepreneurs in the city of Detroit and elsewhere. That spectrum ranges from angel investors to loan funds to banks.
“So do we have enough resources right now in the city? Likely no,” Dishman said. “So what sets Michigan Women Forward out is we are a statewide loan fund that is going to focus on women that are in the low-to-moderate or disadvantaged communities. So that’s going to set us apart because there’s really no one that has that focal point right now.”
MWF executives say that as they go about implementing their increased lending strategy and which types of businesses might be targets for investment, they’re taking some guidance from an initiative of the administration of Detroit Mayor Mike Duggan: 20-minute neighborhoods.
The idea is to create neighborhoods in the city that allow residents to obtain most basic services within a 20-minute walk or bike ride.
That’s going to mean loans for the smallest types of businesses.
“You know, there’s a reason why people … haven’t already done this before. It’s the hardest thing to do,” Cassin said. “Businesses that have five or fewer employees are the ones most vulnerable to COVID, or any other disaster that can happen. And so we’re going to work hard to strengthen those women who make up a large proportion of Detroit entrepreneurs.”
Dishman and Cassin said that beyond just providing some capital, they’ll also be working closely with entrepreneurs to help with general business acumen and financial education.
Executives at MWF say that loans could reach up to $50,000 each. However, given the “risk” those deals often carry, the organization plans to do mostly much smaller loans, Cassin said.
“We want to make some $5,000, some $10,000, some $15,000 (loans). We want to make a lot of those,” she said. “It’s hard work. That’s why nobody wants to do it.”
The CDFI Fund, administered by the U.S. Treasury Department, says that Michigan organizations have loaned out more than $550 million in CDFI loans.
Beyond loan funds for entrepreneurial activities like MWF, several CDFIs operate in other sectors, such as affordable housing.
As Michigan Women Forward gets ready to kick off its CDFI lending program, Dishman said when she looks down the road in three years, she’s hopeful that the organization will have helped contribute toward goals of a more equitable business community.
“So we have developed a more inclusive economy, that when we look around and we see women entrepreneurs, they’re across the city and they’re thriving, and their businesses are thriving,” Dishman said of her vision for the initiative. “And not only have they accessed our capital, but now they are in a position themselves to look for more traditional capital as they continue to grow their businesses on the spectrum.”