Watch the interview with Madison Richards, Assistance Program Officer with LISC LA, providing an overview of the Asset Building for Communities of Color (ABC) program for start-ups and small businesses in Los Angeles.
Frequently Asked Questions
With a generous $20 million donation from Wells Fargo, LISC LA has established Asset Building for Communities of Color (ABC) Program. This initiative has been created to help diverse small business owners across the County of Los Angeles unlock their potential to grow, scale, create jobs, and fuel wealth creation.
What is ABC?
The Asset Building for Communities of Color (ABC) Program will provide growth capital to diverse business owners across the County of Los Angeles. LISC LA will distribute the capital with the following goals:
To produce asset building, ownership, and generational wealth opportunities for diverse business owners that are located in Los Angeles County;
To support the economic recovery and resiliency of diverse businesses;
To avoid displacement of diverse businesses and residents; and
To create opportunities for cooperative ownership and alternative wealth-building vehicles.
Where did the funds come from?
The donation comes from Wells Fargo’s Open for Business Fund, a roughly $420 million national small business recovery effort with a focus on racially and ethnically diverse small business owners who have been disproportionately affected by the pandemic. Wells Fargo created the Open for Business Fund in July 2020 from the gross processing fees it received from Paycheck Protection Program loans made in 2020. Wells Fargo donated funds to Community Development Financial Institutions (CDFIs) and local non-profits to distribute funding across the nation.
What are some details about ABC?
The program will be deployed across four products to meet entrepreneurs where they are in their growth journey:
- Property Acquisition assistance: deployed by LISC LA to businesses and non-profits, capital to assist in commercial real estate acquisition. This product provides 20% of the down payment on commercial real estate, up to $500,000, and is 0% interest and forgivable.
- Growth Capital: deployed by LISC LA to early-stage businesses through patient growth capital up to $250,000 per borrower. This “equity-like” product will assist businesses in filling their ‘friends and family’ financing gap and support them to acquire key assets, resulting business growth.
- Microloans: deployed by Inclusive Action for the City through low-cost micro-loans up to $30,000 in order to purchase equipment, technology, or other key assets for the small business.
- Grants: deployed by Inclusive Action for the City through cash grants up to $5,000.
What other partners are involved?
LISC LA will deploy capital in ways that support businesses at multiple stages of growth. LISC LA will also collaborate with Inclusive Action for the City (IAC) to amplify and diversify our capital deployment strategy and product offerings. IAC will be responsible for the Microloan and Grant Products.
What types of small business owners will be eligible to receive funding through the program?
This funding will support small business owners across the County of Los Angeles. Requests for financing will be scored based on an equitable selection process that will assess characteristics based on the primary business address, taking into account local unemployment rate, poverty rate, effect of the Covid-19 pandemic, and historical neighborhood redlining, amongst other characteristics. Additionally, requests for financing will be weighted based on applicant revenue size, community benefits of the project, primary applicant race, gender, or ethnic identity, and the number and quality of new jobs that will result from the project.
Please note that non-profits are only eligible for the Property Acquisition Assistance product. ITIN-holders may also be eligible, dependent on program requirements.
What types of small businesses or non-profits are not eligible?
The following businesses are not eligible for the Property Acquisition Assistance or Growth Capital Products:
- Publicly traded companies;
- Corporate-owned franchises;
- Financial institutions, such as banks, lenders, pay day lenders, auto title lenders, check cashers, other businesses whose stock in trade is money and mortgages, and other similar entities ;
- Insurance companies, such as life, auto, home, bail bond, and other similar entities;
- Private or social clubs;
- Pawn shops;
- Astrology, Palm Reading;
- Liquor stores, night clubs;
- Lobbying firms or businesses who dedicate 50% or more of their time or resources to lobbying activities;
- Businesses that engage in gambling activities, such as Bingo parlors, casinos;
- Trailer-storage and junk yards;
- Businesses that present live performances of a prurient sexual nature and/or who derive revenue through the sale of products or services of a prurient sexual nature;
- Businesses that generate income through activities performed in violation of state or federal law, including the sale, cultivation or transportation of marijuana;
- Businesses that exist for the purpose of advancing partisan political activities;
- Gun or ammunition stores
Additionally, business-owners with any of the following are not eligible:
- Business owners with an active bankruptcy or bankruptcy settled within the last 12 months;
- Business owners with misdemeanor convictions within the last 3 years or felonies within the last 7 years
Does the funding come with additional support?
The impact of this capital hinges on an effective business outreach and a tailored technical assistance strategy. Capital will be combined with technical assistance advising designed to improve the capacity of small businesses as they progress through each stage of business growth.
Do I have to be a Wells Fargo Customer to receive funding?
No, you do not need to be a Wells Fargo customer to apply.
When and how do I apply for this program?
Applications for LISC’s products, Property Acquisition Assistance and Growth Capital, will open again in 2023. To apply to Inclusive Action’s products, Micro-Loan and Grant, please reach out to them via their website: https://www.inclusiveaction.org/
What can I do to prepare to apply?
It is always a great idea to have any financial documents pertaining to your business prepared and up to date. Financial documents include, but are not limited to, business financial statements, business tax returns and personal financials as well.
If I receive funding from another program, am I still eligible to apply?
Yes, small businesses that have received support from any other funding program may apply for this program if you meet the eligibility guidelines for the ABC.
Will funds made available have tax implications?
LISC will issue a Form 1099 for any Recoverable Grant provided under this program at the point of forgiveness. All taxes associated with the acceptance and/or use of a Recoverable Grant under this program are the sole responsibility of the individual Recipient. Applicants are advised to consult with their own tax professionals and/or legal counsel to ascertain the tax impact of any Recoverable Grant that may be provided under this program.
How can I stay up to date on the program?
The latest information about the program, including dates and instructions for applications will be posted on https://www.lisc.org/los-angeles/abc-fund