Urban League of Greater Cleveland unveils UBIZ Loan Fund for minority-owned small businesses

The Urban League of Greater Cleveland is unveiling a program to provide capital exclusively to minority-owned small business in the Cleveland area — and it’s looking for some additional donors interested in furthering racial equity in Northeast Ohio.

The latest initiative, dubbed the UBIZ Loan Fund, will be launched officially through a virtual event at 5:30 p.m. Tuesday, Jan. 26, that will be livestreamed via Urban League’s YouTube and Facebook pages.

UBIZ Loan Fund is considered the second phase of the Capital Access Fund initiative, said Michael Obi, leader of the Urban League of Greater Cleveland’s entrepreneurship center and president of UBIZ Venture Capital, the entity managing the minority-focused lending program.

The CAF provided $4.2 million in small business loans to 29 minority-owned firms between 2016-2019. It was developed through Urban League with support from the National Urban League, National Development Council, Morgan Stanley, Cuyahoga County, the city of Cleveland, KeyBank and other regional banks and foundations.

The idea for UBIZ Loan Fund is similar to CAF in its mission to get capital in the hands of minority-led small businesses.

The loans have repayment terms of between three to five years and any proceeds are reinvested back into the fund to finance additional loans in the future.

“This is a realistic vehicle to create wealth in the Black community of Cleveland,” Obi said. “We have one of the highest poverty rates in America. And when you drill into it, that wealth gap between Black and white families is the biggest roadblock to moving that number. One of the most realistic ways to close that gap is through serious entrepreneurship. That is the way to get out of that poverty.”

The goal for UBIZ is to raise at least $10 million in capital for its efforts over the next 12-18 months, and it’s already halfway there.

About $5 million has already been raised through a mix of sources from private and public sectors including Fifth Third Bank; JPMorgan Chase; KeyBank; PNC Bank; the city of Cleveland and Cuyahoga County; JumpStart; Greater Cleveland Partnership/Cleveland Development Advisors; Fund for Our Economic Future; The Cleveland Foundation; and The Gund Foundation.

“JumpStart is honored to contribute to the UBIZ Fund,” said JumpStart CEO Ray Leach in a statement. “Equitable access to capital is critical for economic growth in our city and we applaud the Urban League of Greater Cleveland for creating a fund that removes barriers and actively supports the growth of Black and Hispanic-owned small businesses.”

The UBIZ Loan Fund is one way for people and companies who have decried the dearth of support and funding for minority-owned businesses to put their money where their mouth is, particularly as issues of racial equity grew to heightened focus in the social landscape of 2020.

“There’s all this talk about structural and racial inequality in America and in Cleveland,” Obi said. “This is a good way for foundations, banks, investors to provide tangible help. And the beauty is the capital keeps giving as this becomes a revolving loan fund.”

While fundraising may continue until mid-2022, the fund already is allocating capital. It issued its first loan last month to a daycare, Obi said, noting he’s sitting on a pipeline of $2 million to $3 million via applications already in queue.

Like CAF, the Urban League offers pre-loan counseling and technical assistance for small businesses looking to grow, in addition to the capital itself.

For aspiring borrowers, there’s almost no sector the loan fund won’t consider. Companies funded in the past run the gamut from restaurants and barbershops to health care, construction and transportation companies.

“As long as it’s legal and legitimate and creating jobs, if the entrepreneur is serious and has a great plan, we will definitely look at it,” Obi said.

Concurrent with the event Jan. 26 about the loan fund, the Urban League will announce recipients of more than $30,000 in cash and prizes related to its sixth-annual pitch competition.

This article originally appeared in Crains Cleveland Business on January 26, 2021.

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