JPMorgan Chase Commits $5M to Underrepresented BusinessesJanuary 1, 1970
Small and diverse businesses often find it cost-prohibitive to meet industry requirements like cyber security, insurance, and bonding when bidding for new corporate business. Satisfying these prerequisites can cost a typical small business somewhere between $100,000 and $500,000, creating a very real barrier to entry to doing business with the financial services industry.
JPMorgan Chase has partnered with the Local Initiatives Support Corporation (LISC), a Community Development Financial Institution (CDFI) and certified 501(c)(3), to manage the program. LISC will administer the initiative end-to-end and report on the impact of this capital assistance on participating businesses. Impact metrics will include new contracts with corporations; new RFPs for which businesses qualify, the number of jobs created and retained; and revenue growth.
“Far too many otherwise-qualified diverse businesses are prevented from securing contract opportunities due to the high cost of compliance,” says Ted Archer, Global Head of Business Partner Diversity at JPMorgan Chase. “We’re proud to join LISC, our top suppliers and other corporate partners to create an industry-wide solution that will remove common obstacles to doing business, and contribute to building generational wealth in diverse communities across the country.”
This initiative, which supports the firm’s global commitment to advance racial equity, creates an alternative financial resource enabling business owners to meet the high minimum standards of most corporations.
The Diverse Supplier Grant Initiative is structured to attract corporate donations, which JPMorgan Chase will match dollar-for-dollar. The firm has initially made $5 million available to match corporate contributions in 2022. So far, over $1.2 million in pledges has been committed by 28 corporations.
Over the past 30 years LISC has partnered with JPMorgan Chase to support inclusive growth initiatives in communities across the US – from affordable housing programs at the municipal level to national lending programs supporting entrepreneurs of color and marginalized business owners. Last year, JPMorgan Chase selected LISC to lead the national expansion of its Entrepreneurs of Color Fund.
“In our on-going commitment to entrepreneurs, LISC wants to establish market opportunities for aspiring businesses looking to work with supplier diversity initiatives nationwide, said Steve Hall, vice president of small business and economic development lending at LISC. “LISC investments will be catalytic to support entrepreneurs, employees, and communities.”
LISC will evaluate applicants and select eligible recipients which will typically be US based certified
Black-, Hispanic-, or Latino-owned businesses with an established track record and annual revenues above $5 million. While open to companies nationwide, JPMorgan Chase has a particular interest in suppliers based in Chicago, Dallas, Houston, Los Angeles and New York, as these cities present immediate opportunities for the firm to support its enhanced spending commitment with Black Hispanic and Latino businesses. Funds can be utilized for tangible business and operational costs including technology; cyber or networking remediation; operational control enhancements such as disaster recovery; increases to insurance and bonding coverage. Depending on business needs, typical grants would start at $25,000 but not exceed $200,000.
The Diverse Supplier Grant Initiative’s built-in, pay-it-forward component is unique in making it self-sustaining. Businesses that receive funds and successfully secure new corporate contracts are required to return the funds to the original pool so they may be awarded to the next wave of eligible diverse businesses. Those that do not gain new corporate contracts as a result of the program can request to have the loans forgiven or repay the dollar amount they received at no interest. Criteria for forgiveness is tied to a diverse business’s access to new corporate contracts and business growth.
“Lowering barriers to corporate-readiness by bridging a common financial gap enables JPMorgan Chase and other participating corporations to develop a larger pool of capable diverse businesses to incorporate into their supply chains.” said Doug Roginson, program director and architect of the initiative for JPMorgan Chase.
Corporations that invest in the initiative can refer potential diverse business applicants for capital, which in turn helps expand and diversify their supply chain. At the same time, diverse businesses that access capital through the program will be in a better position to grow, as they qualify for a greater number of corporate contracts across multiple industries.
Roginson continues, “Through this initial grant, we could potentially transform as many as 100 diverse businesses in the short-term, positioning them not only for contracts with JPMorgan Chase, but for opportunities with the whole Fortune 500.”
To learn more about the Diverse Supplier Grant initiative click here.
To learn more about JPMorgan Chase’s work to advance racial equity, click here