Helping entrepreneurs stay ‘Open for Business’
Wells Fargo is donating approximately $400 million in Paycheck Protection Program processing fees through a new program to support small businesses owned by people who have been hit hardest by COVID-19.
With 41% of their businesses closed because of the COVID-19 pandemic, Black business owners have faced the largest shutdown of any segment in the country, said Ron Busby, president and CEO of the U.S. Black Chambers, Inc.
“If you ask any small business owner their No. 1 concern, they will say access to capital,” Busby said. “But when you ask a Black business owner, they will say their No. 1, their No. 2, as well as their third concern, is access to affordable and accessible capital. That means capital that’s available in their community. That means capital that’s not at a 20% rate. And that means capital that’s not going to be tied to other receivables or other assets that we own.”
“By donating approximately $400 million in processing fees to assist small businesses in need, Wells Fargo’s Open for Business Fund creates opportunities for near-term access to capital and addresses the road ahead to meaningful economic recovery, especially for Black and African American entrepreneurs and other minority-owned businesses.” — Charlie Scharf, Wells Fargo CEO
To help small businesses impacted by the ongoing COVID-19 pandemic keep their doors open, retain employees, and rebuild, Wells Fargo is making an industry-leading commitment by donating approximately $400 million in gross processing fees from the Paycheck Protection Program, as announced in April. Through a new Open for Business Fund, Wells Fargo will provide support for nonprofit organizations who serve small businesses, particularly businesses owned by underrepresented individuals — a group disproportionately affected by the pandemic — to provide needed capital, offer technical support, and develop long-term resiliency programs.
As of June 30, Wells Fargo funded loans under the PPP for more than 179,000 customers, totaling $10.1 billion. More than 60% of those were for loans of $25,000 or less, and 84% had fewer than 10 employees.
“By donating approximately $400 million in processing fees to assist small businesses in need, Wells Fargo’s Open for Business Fund creates opportunities for near-term access to capital and addresses the road ahead to meaningful economic recovery, especially for Black and African American entrepreneurs and other minority-owned businesses,” said Wells Fargo CEO Charlie Scharf. “Wells Fargo is committed to helping small businesses impacted by COVID-19 stay open and get back to growth.”
‘An infusion of much-needed support to the small business community’
“Small businesses are the fabric of our communities, and we know they’re hurting,” said Jenny Flores, head of Small Business Philanthropy for Wells Fargo. “We see the Open for Business Fund as an effort to provide an infusion of much-needed support to the small business community. We want to make sure they can open and stay open.”
According to data from Wells Fargo’s June Gallup/Small Business Index, more than half of the small business owners surveyed expect either stagnant or decreasing revenues in the next 12 months.
The program is launching with an initial $28 million aimed at supporting Black- and African American-owned small businesses, which are closing at nearly twice the rate of the industry, according to the National Bureau of Economic Research (PDF). The first grantees are:
- Expanding Black Business Credit to support the launch of the Black Vision Fund, which will increase capital to Black-focused Community Development Financial Institutions, also known as nonprofit or community lenders, to close the racial wealth gap in African American communities.
- LISC (Local Initiatives Support Corporation) will team up with social impact platform Kiva to provide grants and low-cost capital to more than 2,800 entrepreneurs with a focus on preventing loss in revenue, sustaining employment, and averting vacancies among vulnerable small business owners in urban and rural markets nationwide.
For its first grant cycle, open now through Aug. 7, the Open for Business Fund is accepting applications from Community Development Financial Institutions and special purpose funds formed by CDFIs that focus on people from underrepresented populations. Additional grant cycles focused on technical assistance, training, and long-term recovery will open later this year. Nonprofits can learn more at www.wellsfargo.com/about/corporate-responsibility/community-giving.
“We see the Open for Business Fund as an effort to provide an infusion of much-needed support to the small business community. We want to make sure they can open and stay open.” — Jenny Flores, head of Small Business Philanthropy for Wells Fargo
“The last thing that we want to see happen is for our businesses to get capital and not have the skills and acumen that they need to really be able to implement the programs to have sustainability,” Busby said. “So what we are excited about is ensuring that the businesses get resources that they need, combined with technical assistance, which will create sustainability.”
Ongoing support for entrepreneurs from underrepresented communities
Since 2015, the Wells Fargo Diverse Community Capital program has enabled more than 90 CDFIs finance $1.6 billion in loans to small business owners from underrepresented communities and 1.8 million hours of training, which helped these entrepreneurs sustain 195,000 jobs.
As part of the Diverse Community Capital program, the Wells Fargo Foundation and the National Association of Latino Asset Builders started the nation’s largest loan fund for Latino-owned small businesses with a $10 million grant.
Separately, in March, Wells Fargo announced it aims to invest up to $50 million in Minority Depository Institutions as part of its commitment to support economic growth in African American communities where MDIs, often community-based banks, provide mortgage credit, small business lending, and other banking services.
‘Helping small businesses is vitally important to the economy’
Wells Fargo’s June Gallup/Small Business Index, which provides a quarterly pulse check of sentiment from small business owners around their own economic situations and the wider landscape, highlighted higher optimism on their financial outlook in June than in April. However, this was still lower than in January, prior to the COVID-19 pandemic outbreak.
“Prior to the pandemic, small businesses were in the best shape we had seen,” said Mark Vitner, chief economist at Wells Fargo. “After the pandemic hit, it turned into the worst time we had ever seen. What’s encouraging about Wells Fargo’s Open for Business Fund is it will help boost the prospects of some of the most vulnerable small businesses, the smallest of the small businesses that need help the most. Helping small businesses is vitally important to the economy as a whole. We aren’t going to see a full recovery without small businesses.”
“The funding that Wells Fargo is going to provide through the Open for Business Fund is truly going to be appreciated and will allow our communities, as well as our businesses, to get the kick-start that they need to continue to grow.” — Ron Busby, president and CEO of the U.S. Black Chambers, Inc.
In specifically oversampling African American, Hispanic, Asian, and women business owners, June’s survey also observed that 52% of these owners felt the U.S. economy was in a recession or depression, while a little more than one-quarter said they did not feel very prepared or did not feel at all prepared for the economic downturn that has resulted from the pandemic.
“The funding that Wells Fargo is going to provide through the Open for Business Fund is truly going to be appreciated and will allow our communities, as well as our businesses, to get the kick-start that they need to continue to grow,” Busby said.
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Results for Wells Fargo/Gallup Small Business survey are based on web interviews with 1,478 small business owners, conducted during the period of May 29–June 5, 2020. This survey also included an oversample of diverse segments — ensuring a minimum of 300 interviews each among African American, Asian, and Hispanic small business owners. Beginning in second quarter 2019, the interview process formally transitioned from outbound phone data collection to a national small business web opt-in panel provider.