The Global Entrepreneurship Network (GEN) and Hello Alice, the fintech helping over one million small businesses access capital, have created a $70M Equitable Access Fund, with initial funding led by Wells Fargo, that will be developed and deployed over the next five years to improve equitable access to credit and capital amongst small business owners. The fund will provide credit enhancements, including guarantees, loan loss reserves, and cash collateral deposits to financing partners to enable them to reasonably increase their risk tolerance to help unlock credit access for underserved high-potential but credit-challenged small business owners.
The fund is part of the Equitable Access Program, which provides increased credit access and financial education to high-potential underserved entrepreneurs with credit challenges. The program is run by Hello Alice and GEN. Wells Fargo provided the initial major grant to start the Equitable Access Fund. Financing Partners of the Equitable Access Fund will include First National Bank of Omaha (FNBO), the issuer of the Hello Alice Small Business Mastercard, and select partners in the Hello Alice Financing Marketplace. Additional key partners of the Equitable Access Program include Mastercard and the Kauffman Foundation.
The fund, managed by GEN, addresses significant untapped demand for business credit among small businesses, especially in those run by members of the New Majority, which includes women, veterans, BIPOC, Latinx, those with disabilities, and LGTBQ among other groups. According to Hello Alice data, only 25 percent of small business owners have applied for a business credit card, and 85 percent of those applications were denied due to poor credit or lack of credit. Even so, 90 percent of small business owners without business credit believe a business card would impact their business in a positive way. Through the Equitable Access Fund, these owners gain a pathway to accessing a business credit card, building their credit profile, and eventually qualifying for traditional credit and lending products needed to grow their businesses. The $70 million fund aims to unlock up to an estimated $1 billion in credit access for thousands of small business owners. Hello Alice and GEN will continue to work with and bring on new financing partners over the next several months to build out the fund and support small business owners in need of credit to grow.
“There is an estimated $40 billion annually of unmet financing demand from BIPOC-owned employers that applied for financing, and an estimated $1 trillion in unmet financing demand from all small businesses nationally,” says Elizabeth Gore and Carolyn Rodz, co-founders of Hello Alice. “The Equitable Access Fund provides credit enhancements that enable our financial partners to reasonably increase their risk tolerance, which ultimately unlocks credit access for those who really need it. We’re looking forward to creating more partnerships and bringing more institutions on board to the fund to achieve the goal of equitable access to credit.”
“The Equitable Access Fund will open doors for high-potential, credit-challenged entrepreneurs to achieve their full potential as founders, job-creators, and agents of change,” says Jonathan Ortmans, founder and president of the Global Entrepreneurship Network. “While our focus is on the United States credit system, we believe the outcomes of this work will also serve as a case study for other nations to learn from and adapt to support under-served entrepreneurs within their jurisdictions.”
The Equitable Access Fund is the latest initiative Wells Fargo has supported as part of its larger commitment to expand community engagement and enterprise philanthropy efforts through the Wells Fargo Foundation. The foundation has a strategic focus on small business growth, financial health, and a sustainable future, which are core tenants of the Equitable Access Program and Fund.
“Small businesses are a critical contributor to the economy and to building generational wealth,” says Otis Rolley, president of the Wells Fargo Foundation. “We need to create more pathways for historically marginalized small businesses to grow and prosper. We are honored to join forces with Hello Alice, GEN, and the other partners involved to take one step closer to making equitable access to credit and capital a reality for small business owners across all industries.”
The Equitable Access Program is part of GEN and Hello Alice’s commitment to ensuring that all entrepreneurs and small business owners have access to the capital they need to grow the sustainable businesses that power their communities and economies. As part of the program, small business owners will be provided with wrap-around credit-building education and technical assistance through an assessment tool called the Business Health Score, which launched in April 2023. The score provides a comprehensive overview of a business’s financial health, which allows small business owners to make informed decisions about how to improve financial performance and achieve long-term success through a real-time recommendation engine. Both the score and the fund provide an avenue for banks to better serve small businesses and demonstrate the lucrative value of investing in the New Majority.
For enterprises or foundations interested in supporting this Fund, please reach out to William Charter at the Global Entrepreneurship Network by emailing charterw@genglobal.org.
