A new fund to help “socially disadvantaged” entrepreneurs acquire property
DC’s new business acquisition fund will help small business owners who typically don’t have access to capital buy their properties or make down payments on new ones. The goal is to empower âsocially disadvantagedâ entrepreneurs, including women and BIPOC, to stay rooted in DC and preserve the city’s culture.
The DC Board included the Business Acquisition Fund in the budget it recently adopted. Eligible district residents can apply for grants of up to $ 750,000 or 25% of the total acquisition cost, whichever is lower. With just $ 4 million allocated to the fund, there is a limit to the number of businesses like restaurants and retailers it can help. Ward 5 council member Kenyan mcduffie requested $ 10 million for the program.
âDown payment assistance helps remove barriers to accessing capital and opens up opportunities for wealth,â McDuffie said. The owners will not be the only ones to benefit from it. âIf these people are able to buy their buildings, refinance them, and expand them, they can hire more people. The people that black-owned businesses typically hire are minority residents. ”
Systemic racism has long made capital less accessible to entrepreneurs of color. Some cannot always turn to friends and family for large sums of investment and sometimes banks exclude them from traditional loans. Credit is part of the problem. CEO of Capital Area Asset Builders Joseph Leitmann-Santa Cruz says one in five adults in Washington was invisible before the pandemic.
âWhenever their credit rating is established, no information comes up,â he said. City paper earlier this year. “The majority of them are black and brown.” This statistic does not even take into account undocumented residents who represent 5% of the population. The pandemic, according to Leitmann-Santa Cruz, has only exacerbated the situation.
The deputy mayor’s office for planning and economic development will administer the fund and McDuffie expects applications will be opened soon after the start of fiscal 2022 in October. He has worked with DMPED on other programs with similar goals, like the one in the city Equity Impact Fund. The Business Acquisition Fund will play on the Equity Impact Fund using the same âeconomically disadvantagedâ and âsocially disadvantagedâ eligibility criteria.
According to the DC code, an economically disadvantaged individual means “someone whose ability to compete in the free enterprise system is reduced due to reduced opportunities to obtain capital and credit compared to others in the same industry. activity where this deficiency is linked to the status of the individual. as socially disadvantaged. And a socially disadvantaged person is one who “has reason to believe that the individual has been the victim of prejudice or prejudice because of his identity as a member of a group regardless of his qualities as an individual. “.
The Greg Harrison, a fourth-generation Washingtonian, is considering applying. He is co-owner The DC Museum with Muhammad’s hill. The duo’s experience is in the music industry. They opened their streetwear clothing store in 2016 after coming back from the road with Wales. âGrowing up in the city in the ’90s, we saw at least 10 to 15 brick and mortar streetwear clothing companies that were here,â Harrison says. âWhen we came back from touring, there was only one or two left. We have decided to take action.
Finding a place was not easy. They eventually landed at 2014 Rhode Island Ave. NE where they are currently renting space. âIt was a fight,â says Harrison. âNo one would hire us. It is very difficult to try to buy commercial property in this city. Everything is super high, it was not in our range. Since its opening, they have become influential members of the community and have hired around 12 employees. âWe have a ton of jobs created because of our presence there. And then there is the return. They’ve organized turkey drives, offered free haircuts, and even footed the bill for some funerals.
âSince we have that connection, this fund would help us stay connected by continuing to allow us to have equity in the property that we are able to buy,â Harrison continues. He comes from the southeast and Hill from the northwest. âWe have done our part to unify the city. It would be really beneficial for a company like us to be part of this initiative because we have the eye and the ear of most of the city.
McDuffie expects the lion’s share of candidates like Harrison to come from Wards 5, 7 and 8. âI want to help. [DMPED] focus on the areas around DC that are ripe for commercial gentrification and the relocation of existing minority-owned businesses, âhe says. But there are neighborhoods in all neighborhoods that have business owners who would benefit from the help of the Business Acquisition Fund like The following spices in Takoma in Ward 4.
Angel Gregorio owned the popular spice shop for six years and leases from a landlord who she says has owned the property for decades. He has no interest in selling, according to Gregorio, so if she applies for a grant from the Business Acquisition Fund, she will invest the money for a down payment on a new location. Owning a property would give it security and stability.
âI want to know that I can maintain a business in this city where I was born and raised,â she says. His family still lives near the current Spice Suite. âI couldn’t afford to buy without assistance. I can qualify for loans the same way we can all qualify for student loans, but who wants a loan when grants are available to help you live more comfortably and make space? There is the flexibility to make it whatever I want it to be faster.
Grants are canceled after seven years. Once certain conditions are met, the privilege disappears. If an owner seeks to sell the property or if a business owner goes out of business within the first seven years of receiving a grant, the city may reclaim the value of the grant.
Gregorio agrees with others that the program will help address the lack of access for black business owners, especially in an expensive city. âIt’s not a few hundred thousand dollars to buy space, it can be over a million dollars in DC proper. If this is your first time buying commercial property, the banks don’t want to risk you. A subsidy would close this gap. Getting $ 500,000 to invest in a $ 1.5 million property, says Gregorio, strengthens your loan application and profile and puts you in the door.
If there was one thing Gregorio would change about the Business Acquisition Fund, it would be to channel more money so that more people could participate. âMore money is always good,â she says, noting how grateful she is that the program has been funded. âIt’s been a lot of promises and nice words about places that have been able to hold up, but it means, ‘Let us help you stay here. “”
McDuffie hopes his colleagues in other sectors will step up to help entrepreneurs become fixtures in their communities, safe from the threat of eviction. He says, âIt is important coming out of the pandemic that government and leaders in other sectors like banking and philanthropy work together to remove systemic barriers and build an economy that reflects the beautiful diversity of the district. “