Empowering Black-Owned Businesses: “Activate Detroit” Brings New, Credit-Blind Approach
Character-based evaluations, rather than credit scores, are key for Activate Detroit, a new loan product from mission-driven lenders CDC Small Business Finance and Capital Impact Partners.
ARLINGTON, VA. (April 25, 2022) – Credit scores don’t tell the whole story of small business entrepreneurs. Activate Detroit – a new loan product meant to empower Black entrepreneurs – is changing the way their story is told.
Activate Detroit’s transformative approach includes:
- No minimum credit score requirement
- Fee-free lending
- A simplified application process built to help borrowers move from idea to financing as quickly as possible
- Complimentary pre- and post-loan technical assistance for all borrowers, such as developing business projections, etc.
- A grant tied to a percentage of the loan amount that can be used to pay down your balance in times of distress or financial hardship
“Black entrepreneurs have been excluded for generations from traditional financial institutions, which has kept them from being able to launch and grow their businesses,” said Ellis Carr, president and CEO of CDC Small Business Finance and Capital Impact Partners. “We recognized that credit scores only tell part of a story, and we wanted to create a product that is anti-status quo – a product that focuses on character, trust, commitment and community. Activate Detroit is a solution that we hope will be more equitable and inclusive and will help break a cycle of distrust and disenfranchisement.”
How Black Business Owners Can Apply for Activate Detroit
Activate Detroit loans are available to applicants from Black-owned businesses in Wayne, Macomb, and Oakland counties. Applicants must:
- Have been generating sales for at least three months
- Be able to show six months of business (or personal) rent and utility payments
- Provide an 18-month business projection
- Participate in free business advising sessions both before and after the loan is funded
Activate Detroit loan product features include:
- Fee-free loans up to $100,000 for working capital and business debt refinancing
- 9% fixed interest rate
- No minimum FICO scores
- No collateral or down payment required
- Flexible repayment structures
- Streamlined document collection process
- 3% of loan amount will be accessible as an emergency fund grant
“This is a one-of-a-kind loan product that will serve as a gateway to opportunity for Black-owned small businesses,” said Nimaj Driscoll, a Detroit-based loan officer with CDC Small Business Finance. Activate Detroit thinks beyond the ‘5 Cs of Credit’ of traditional lending and instead allows our team to assess the borrower based on their character, their strengths and their commitment to their dreams.
“We spent a lot of time connecting with other CDFI lenders and small business owners to identify gaps in the market and better reach the borrowers that are often overlooked,” Driscoll said. “There are many structural barriers in lending, and we hope Activate Detroit will help identify alternatives that are less racially biased and more equitable.”
How Activate Detroit is Already Helping Local Business Owners
Piloted in October 2021 to test its effectiveness, Activate Detroit has received nearly 190 applications and funded 13 loans, totaling $677,500. Some of the recipients include Live Cycle Delight, Hell on Wheelz, Humble Brothers, Love Laces, Andre Thomas, Insatiable Hair, Home Sweet Home Care and DIFFTeam Hoops.
Another inspiring example is Supreme Cafe. Launched in June 2019 by Jamaal Muhammad, Supreme Cafe is a restaurant and catering company serving organic and vegan desserts, sandwiches, soups and more. Jamaal launched the cafe with the intention of offering healthy food options in a neighborhood that is otherwise a food desert.
“One of the things that has helped me be successful is to always make sure I put the people in the community first and truly care about my customers,” Muhammad said. “This business is bigger than just my passion for cooking and baking. I’ve faced my own challenges in life, but I know there is greatness inside of me, and I wanted to turn that into doing something good. I have a dream and love in my heart for helping people in whatever way I can – and being able to use my business to help out my community has really been a blessing.”
Through the Activate Detroit loan along with a grant from Motor City Match, Jamaal will be able to fully build out his retail space located on Wyoming Street in the Bagley neighborhood, hire more employees, scale up operations and the e-commerce portion of his business, and create a space for weekly healthy eating classes.
For more information about Activate Detroit, please visit https://cdcloans.com/activate-detroit/.
A New Alliance To Deliver Equitable Lending
Activate Detroit represents another effort by CDC Small Business Finance and Capital Impact Partners to create more equitable lending products for those who are overlooked by traditional financial institutions. CDC Small Business and Capital Impact joined their operations in 2021 and launched a transformative new enterprise to innovate how capital and investments flow into historically disinvested communities. Detroit is a pilot area of their operations along with other major metropolitan areas in the United States.
About CDC Small Business Finance:
CDC Small Business Finance is the nation’s leading mission-based small business lender and advocate, working to provide entrepreneurs access to the capital and opportunities they deserve.
CDC offers numerous financing products including the Small Business Administration (SBA) 504 commercial real estate loans; SBA Community Advantage working capital loans; and the SBA Microloan. We also offer non-SBA products to provide more equitable access to credit for those who are unable to qualify for traditional financing. CDC also provides free business advising to support both potential borrowers get loan ready as well as to help existing small business borrowers grow and expand their business.
In 2020, CDC joined up with Capital Impact Partners to transform how capital and investments flow into historically disinvested communities. Through community and economic development, small business lending, impact investing, and technology solutions, these leadership organizations are offering a suite of products and services to drive community-led solutions that support economic mobility and wealth creation.
Since 1978 CDC has provided more than $21.3 billion in funding to 12,000 borrowers and helped create and preserve over 214,000 jobs. Headquartered in San Diego, California, CDC is dedicated to helping entrepreneurs obtain access to capital in Arizona, California, Michigan, Nevada, and Washington, D.C.
About Capital Impact Partners:
Through capital and commitment, Capital Impact Partners helps people build communities of opportunity that break barriers to success. We work to champion key issues of equity and social and economic justice by deploying mission-driven financing, capacity-building programs, and impact investing opportunities.
A nonprofit Community Development Financial Institution, Capital Impact has disbursed more than $2.5 billion since 1982. In 2020, Capital Impact launched a new enterprise with CDC Small Business Finance under one leadership team and national strategy to reinvent traditional and mainstream financial systems. Our goal is to ensure these systems equitably serve communities of color to drive community-led solutions that support economic mobility and wealth creation.
Our leadership in delivering financial and social impact has resulted in Capital Impact being rated by S&P Global and recognized by Aeris for our performance. Headquartered in Arlington, VA, Capital Impact Partners operates nationally, with local offices in Austin, TX, Detroit, MI, New York, NY, and Oakland, CA.