AmFam, Urban League create loan fund to promote business equity
As part of American Family Insurance’s “Free to Dream” initiative, the insurer is partnering with the Urban League of Greater Madison on a $400,000 revolving loan program for new and emerging minority-owned businesses that will be located in the new minority business hub in Madison’s South Park Street corridor.
Under the program, which was announced last week, the Urban League will attempt to grow the loan fund to at least $1 million by June 30 and then begin making loans and grants to a variety of early-stage, minority-owned businesses that will operate in the hub. The loans will average $20,000 each, and they will be made available to businesses at low interest rates with no collateral required.
Nyra Jordan, social impact investment director for American Family, hopes the business hub will become a place where family-supporting businesses can grow. “What I’m hoping this program will accomplish is to give access to resources for underserved entrepreneurs who may not otherwise have access to capital to start their businesses or access to mentors and resources to be successful,” Jordan says. “It’s important to note that as part of this hub, relationship and ecosystem building will be very important. I hope these entrepreneurs will be surrounded by the community and the environment they need.”
The $400,000 to launch the loan program will be provided through the American Family Insurance Institute for Corporate and Social Impact. It will include $150,000 to design and staff the program and $250,000 to seed the loan fund. The institute partners with public and private organizations to invest in programs that address societal issues and help close equity gaps.
American Family has pledged $105 million over the next five years to its “Free to Dream” initiative. The $105 million is in addition to $67 million contributed to community-work and social-cause startups over the past five years by American Family Insurance, the American Family Dreams Foundation, and the institute. Of the $105 million in new funding, $53 million will support community partners and projects through the foundation, and $52 million will be invested in social-cause startups by the institute.
Meanwhile, the minority business hub, an economic development project announced in July, is being developed in partnership with a group that includes the Urban League, city and county government, the Madison Black Chamber of Commerce, and neighborhood stakeholders. In addition to the funding, minority businesses will have access to a full complement of technical assistance, including individual coaching to develop strategic business plans, connections to other business support resources, and access to a network of culturally competent business experts.
Jordan characterized the investment as a “replenishing financing pool.” When combined with guidance and support through the hub, it’s an investment designed to stimulate business growth and job creation in the south side community. Where the mentors come from — Madison, other cities across Wisconsin, or anywhere else thanks to video conferencing technology — is up to the Urban League, Jordan says, but the goal of the project will be to ensure that entrepreneurs have access to the best business resources.
“Since we’ve all been in this remote world this past year, one of the opportunities that has presented itself across the board is access to resources that might not be as proximate to us as we have become accustomed to,” Jordan says. “There is definitely a focus on Dane County and the Greater Madison area with the hub, but the resources that can empower success will be important. So, we’ll lean heavily on the leadership from the Urban League to determine the best approach in acquiring those mentorships, and we’ll look to see where we can continue to provide support in that area as well.”
Dr. Ruben Anthony, president and CEO of Urban League of Greater Madison, says the investment will jump-start a much-needed business readiness program so that there is a full pipeline of entrepreneurs ready when the hub opens in 2022. The hub is to be a vibrant commercial destination space in the South Park Street corridor “where black-owned businesses can thrive and build a legacy,” he adds.
The south side project will be modeled after Sherman Phoenix, an entrepreneurial hub in the Sherman Park neighborhood of Milwaukee that is also supported by American Family. At Sherman Phoenix, space and programming is provided for small businesses of color, and community and cultural events are held there.
In Madison, the site of the hub is still to be determined, but Jordan expects the programming contained within to develop as part of a public-private partnership. American Family has been devoting resources to Free to Dream for several years, but more creative ideas have come out of corporate America since the police-involved murder of George Floyd last May, and Jordan expects corporate philanthropy to lead the way.
“For us, issues around equity and justice have long been important, but recent events have given us a little more urgency around how we’ve addressed the needs,” Jordan says. “With the launch of the institute in 2018, we recognized that we could not continue to look at societal problems in the same way and that the approach to these solutions needs to be different. We’ve been creative through the work of the institute, but yes, this will be more of a partnership.”
Click here to sign up for the free IB Ezine — your twice-weekly resource for local business news, analysis, voices, and the names you need to know. If you are not already a subscriber to In Business magazine, be sure to sign up for our monthly print edition here.