Wells Fargo donates $20 million to help ethnically diverse small businesses in Charlotte

The Charlotte commitment is one of the biggest the bank has made under its $420 million Open for Business Fund.

Wells Fargo today announced a $20 million commitment aimed at helping to start and grow ethnically diverse small businesses in Charlotte.

The funding, administered as grants through Foundation for the Carolinas as part of the Mayor’s Racial Equity Initiative, is expected to reach 1,000 businesses over the next three years, starting in 2022.

Wells Fargo said the money will be given to small businesses to acquire assets such as storefronts, equipment and technology. Priority will be given to business located in the city’s six corridors of opportunity.

“If I could wake up every morning and have an event like this,” Mayor Vi Lyles said at the Harvey B. Gantt Center on Friday. She added that today’s announcement wouldn’t have been possible without Charlotte’s long history of public/private partnerships.

Charlotte Mayor Vi Lyles thanked Wells Fargo for its donation that will go toward helping racially diverse small businesses on Nov. 19 at the Harvey B. Gantt Center. (Photo: Sarafina Wright)

“When people ask what’s the secret sauce? It’s not McDonald’s…or any of that,” Lyles said. “It’s really the secret sauce that we have to be able to collaborate and work together on changing and keeping our city strong.”

The donation from the bank will come from a $420 million Open for Business Fund that Wells Fargo established using fees it collected for administering federal Paycheck Protection Program loans. The fund has been focused on assisting racially and ethnically diverse small businesses disproportionately affected by the Covid-19 pandemic.

Wells Fargo CEO Charlie Scharf said the Charlotte commitment is one of the biggest the fund has made.

“We’re proud to do it in Charlotte, where Wells Fargo has more employees than any other city, and to do it with important local partners,” he said. “We’re looking forward to replicating this model in other cities next year.”

Scharf said helping small businesses survive the pandemic has been a significant focus for Wells Fargo. And by distributing the money as grants, not loans, he said, the bank is looking to “maximize its impact.”

Why it matters

According to a Washington Post analysis published in August, some of America’s largest corporations pledged a combined $50 billion last year to address issues related to racial inequality in the United States. Many of those pledges were made in the turbulent aftermath that followed the killing of George Floyd by a Minneapolis police officer.

The civil unrest that followed Floyd’s death, combined with the disproportionate impact that the Covid-19 pandemic has had on communities of color, seemed to raise new awareness in corporate boardrooms of a need to address longstanding racial disparities across the country.

Among the greatest of those disparities, economists say, is the racial wealth gap.

By some estimates, the net worth of a typical white family in the United States is nearly ten times greater than that of a Black family. In turn, economists say, that wealth inequality invariably leads to other racial disparities — including a disparity in business ownership.

In seeking to specifically aid minority-owned businesses, Wells Fargo has joined a growing list of corporate and philanthropic donors.

Last month, Fifth Third Bank announced a $20 million commitment to aid economic development in Charlotte’s Historic West End. Much of that money will be used to make small business loans.

According to a 2021 survey conducted by Morning Consult, three out of four (74%) small business owners say owning their physical assets or improving equity in their assets is a top priority.

Fifty-seven percent said owning all their physical assets debt-free would significantly improve the financial health of their businesses.

Charlotte Mayor Vi Lyles’ Racial Equity Initiative, announced earlier this month, seeks to raise $250 million to address systemic inequality in Charlotte. The initiative launched with $196 million in pledges from some of the region’s largest companies, including Bank of America, Atrium Health, Truist, Lowe’s and Duke Energy.

The money will be aimed at addressing social and economic disparities in Charlotte’s “corridors of opportunity” — six regions in the city where crime, unemployment and poverty are disproportionately high.

During Friday’s announcement, Michael Marsicano, president and CEO, Foundation For The Carolinas, called the $20 million Wells Fargo donation “cutting-edge.”

Adding: it’s at the “vanguard” of reshaping how American society overcomes decades of inequality and inequity in access to capital.

“I can’t overstate how significant it is that we will be making capital available in the form of grants, not in the form of loans,” Marsicano said. “With grants, you immediately add to the balance sheet of a business as compared to loans that increase financial burdens. In other words, creating direct pathways to wealth creation.”

Who’s eligible

Tracey Greene-Washington and Edmund Washington gave remarks during the announcement of Wells Fargo’s $20 million small business donation on Nov. 19 at the Harvey B. Gantt Center. (Photo: Sarafina Wright)

During the event, Wells Fargo also spotlighted local entrepreneurs who previously got grants under the company’s Open for Business initiative, like Edmund Washington and Tracey Greene-Washington, owner of two No Grease! Barbershop franchises in Charlotte.

The business owners testified how assistance from Wells Fargo allowed them to sustain their business during the pandemic and grow.

Edmund Washington said they have a plan to open 100 barbershops over the next ten years. Not only that, they want to own the technology it takes to operate and the real estate of their locations.

A technology professional by trade, he said, “This is not just a barbershop; this is a tech company. That’s the vision.”

The small business grants will target three broad categories:

  • New businesses: people who need capital to formalize a small business — such as a painter who needs to buy a van, ladders and equipment — and people switching careers and starting small businesses for the first time.
  • Stabilizing businesses: people who need money to stabilize a business coming out of the pandemic, such as a restaurant owner who wants to buy a physical space to avoid paying rent.
  • Expanding businesses: small business owners who need funds to expand an already-thriving business, such as a company that needs equipment to increase production or a warehouse to store inventory.

For more information on this new program, visit fftc.org/WellsFargoGrants.

QCity Metro editor Glenn H. Burkins contributed to this report.

This story has been updated.

Sarafina Wright
Sarafina covers Historic West End under a grant from the John S. and James L. Knight Foundation. She earned a journalism degree from Howard University. Email news tips to sarafinawright@qcitymetro.com or connect with her on Twitter and Instagram @sarafinasaid.

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