Business owner Terrell Dillard said his two companies "were busting at the seams" when he went out for a six-figure loan in 2022. The former banking executive knew the commercial lending landscape but didn't take the usual route. Instead, he turned to the Urban League of Greater Cleveland and its UBIZ Venture Capital fund.
Dillard knew the Urban League, and they knew him. Dillard once taught Urban League-sponsored classes to new business owners. He said he’s had long, fruitful relationships with the Urban League and its mainstays, including UBIZ President Michael Obi.
Dillard wanted to take his business to UBIZ rather than engage a mainstream banking industry that, studies show, disproportionately denies the financing needs of Black business owners.
“There are very unique challenges in the minority community that we have to deal with, no matter how much success we have,” said Dillard, who serves on boards at Team NEO, a regional economic development organization, and the Cuyahoga Community College Foundation. “And that's why I feel it’s important to keep organizations like the Urban League and UBIZ top of mind.”
There are 92 Urban League affiliates in the U.S., but only a few operate loan funds. Launching the UBIZ fund in 2021 was the finishing touch for the local Urban League’s Entrepreneurship Center services, which range from teaching business-startup basics to lending money so small businesses can grow. In addition, accelerator programs boost minority-owned restaurants, construction companies and women-owned businesses.
Fostering Black business growth “became very important for us because we know that if our businesses can thrive, that's a wealth generation model and that's important to our community,” said Urban League CEO Marsha Mockabee.
The Urban League, through its online and in-person services, reaches about 2,200 minority-owned businesses each year in Cuyahoga and surrounding counties. Those businesses have an impact of $90 million on the economy, said Obi, who is also the Urban League’s Executive Vice President for Economic Development. The impact includes the value of contracts those businesses receive, the dollar amount of their business loans, any equity infusion or grants, and the new jobs generated, Obi said.
Obi’s responsibilities have included leading the Urban League’s Entrepreneurship Center since it opened in 2004. A goal is to generate more wealth in Cleveland, one of the poorest cities in the country, through Black business ownership.
Here and nationally, the number of Black-owned employer firms (businesses with more than one employee) has been rising. That number reached 1,149 in the Cleveland-Elyria metropolitan area in 2021, according to a recent report from the Brookings Institution, a Washington, D.C.-based think tank. But Black firms made up just 3% of all employer-owned firms in the region, far below Blacks’ 21.6% share of the area’s 2021 population, according to Brookings.
Black entrepreneurs face numerous barriers to starting and growing a business, particularly access to capital. To help address that challenge, the Urban League of Greater Cleveland in 2016 teamed with the National Urban League, Morgan Stanley, Grow America (formerly known as the National Development Council, a nonprofit economic and community development organization) and others to establish a loan fund for minority-owned small businesses. Through 2019, the fund made $4.2 million in loans to 29 small businesses.
Capital for Growth
Based on that success, the local Urban League launched UBIZ Venture Capital in January 2021. The nonprofit affiliate handles underwriting for the revolving-loan fund, a self-replenishing pool of money that uses payments on old loans to issue new ones.
About $5 million is committed to the UBIZ fund so far, Obi said. A building block was a $1.8 million award from the U.S. Commerce Department’s Economic Development Administration for small business lending outside of the city of Cleveland in Cuyahoga County. (A similar EDA fund already operates in the city of Cleveland. Obi is hopeful they can collaborate in 2024.)
The Fund for Our Economic Future, a local funding alliance of more than 40 organizations, helped draw matching funds for the Urban League’s EDA award. Besides UBIZ, other contributors to the loan fund included the Cleveland and Gund foundations, FirstEnergy, PNC Bank, Cuyahoga County, and the Greater Cleveland Partnership’s Cleveland Development Advisors, a community reinvestment fund. JumpStart, a regional venture-development organization, pitched in with a $1 million loan to launch the first round of UBIZ funding. In March 2022, FirstEnergy committed a $1 million investment to the UBIZ Venture II fund, for loans to minority-owned small businesses in Cuyahoga, Summit, Lake and Lorain counties.
“Our intent and purpose in partnering with UBIZ was to provide essential capital through a program and a mechanism that would reach diverse entrepreneurs with the highest need,” said Teleange Thomas, JumpStart’s Chief Operating and Relationship Officer. “The fund is providing a risk-friendly, accessible product that most entrepreneurs were not able to access through some of the traditional financial institutions. So, we've been pleased.”
So far, UBIZ has made more than $2 million in loans to small businesses and $400,000 in grants to businesses participating in accelerator programs. Early on, lending included 29 microloans to small businesses needing short-term relief during the pandemic. The focus now, Obi said, is small- to medium-sized businesses with high-growth potential. UBIZ has executed 18 loans, generally ranging from $80,000 to $300,000, with repayment terms of five years. Interest rates are competitive with commercial banks.
“This is the kind of capital that takes most small businesses from shoestring to really start growing – opening a new location, buying additional heavy equipment or hiring and creating new jobs,” Obi said.
Minority business owners who have trouble landing a bank loan will find a different approach with the UBIZ fund, Mockabee said.
“We’re able to look at character and credit score,” Mockabee said. “Are they coachable? Are they able to do what we ask to strengthen their business from a financial acumen perspective? … It’s patient, flexible capital.”
The quality of UBIZ’s loan portfolio hinges on intense counseling with business owners, Obi said. The counseling and other support services come at no cost through two programs offered by the local Urban League’s Entrepreneurship Center.
The Small Business Development Center, in cooperation with the U.S. Small Business Administration, offers cash flow analysis, financial projections, strategic business planning, market research and other services to fledgling and established business owners. Loan candidates also work with an adviser through the loan process.
The goal is to “ensure that the business owners fully understand how to manage the business ‘by the numbers’ and have a clear and realistic strategy for sustainable business growth,’’ according to the UBIZ website.
The Minority Business Assistance Center, in cooperation with the Ohio Department of Development, offers help that includes accessing capital; obtaining surety bonds; procuring contracts; and gaining local, state and federal certifications, such as minority-, disadvantaged- and women-owned businesses. The certifications open a network of opportunities with governments and other companies.
The UBIZ fund has been tailored to help Black business owners overcome long-standing challenges to financing, said JumpStart’s Thomas.
“What the Urban League has been able to do is understand those barriers at a unique and in- depth level, and construct loan products that are still competitive, but are responsive to the needs of the entrepreneurs and, and the community,” Thomas said. “I would say as importantly, the (loans) come with the wraparound support and services so the capital can be optimized and applied in an ideal way for the business to really be able to grow and be in a position to pay it back without issue.”
Obi is eager to grow the UBIZ fund from its current $5 million to $50 million or more down the road. That would enable larger loans for “serious Black entrepreneurs who want to scale up to make acquisitions,” Obi said. “It serves a need we see to create larger businesses in the Black community.”
Raising the money from area banks and other sources will be a challenge, Obi said. But he’s more concerned about structuring deals for the demand that’s already out there.
“We’re providing technical assistance with some of them already,” Obi said. “There are some in the pipeline that we are working on.”
A loan to handle fast growth
Businessman Terrell Dillard said the Urban League has been vital to the two businesses growing at his Warrensville Heights headquarters – ZayMat Distributors, a multi-state supplier of fuel, industrial supplies, safety equipment and other products; and JAN-PRO Cleaning & Disinfecting of Greater Cleveland, Akron and Toledo, which oversees 200 JAN-PRO franchises. ZayMat and JAN-PRO operate under J.T. Dillard LLC.
Early in his career, Dillard’s work in the local banking industry led to connections and involvement at the local Urban League, including teaching classes on how to start a business. After buying a JAN-PRO master franchise license in 2003, Dillard received referrals from the Urban League to business people interested in JAN-PRO franchises.
Dillard said the Urban League encouraged him to get his businesses certified as minority- and disadvantaged-business enterprises. The certifications typically attract 10 to 20 percent of his business, Dillard said. That rose to 50 percent at the height of the pandemic.
“We grew to a point where I needed a line of credit,” said Dillard, who turned to UBIZ for a loan in 2022. The terms “were amenable” and the money “was much needed. … Being able to add staff, equipment, capacity and vehicles was very important.”
Dillard had significant deposits in area banks but wanted to do his loan through UBIZ, for several reasons. The banking industry is not doing enough to address disproportionate denial of financing to minorities, he said. And it was important to do business with an organization that fosters growth of Black businesses, said Dillard, who sits on the board of The Presidents’ Council, an advocacy and development group for Black entrepreneurs in the Northeast Ohio region.
“I feel it's important to support those organizations that are in place to serve underutilized communities,” Dillard said. “So I don't think there's a better reason.”
Accelerating small business growth
There have been few defaults among UBIZ loan recipients, Mockabee said. UBIZ’s track record has helped draw funding for other efforts, including UBIZ’s accelerator programs.
“We're trusted now for those funds to flow through us because they know that if we're lending money, we have certain criteria that we follow,” Mockabee said. “And we're a safe place to put money that can be distributed through our network.”
One example is the Black Restaurant Accelerator Program, operating through the national Urban League and $10 million in funding from the PepsiCo Foundation. The five-year program runs in Cleveland and 11 other Urban League affiliates to help restaurant owners deal with systemic barriers, such as a lack of access to capital and the adverse impact of Covid.
In the program’s first three years, 35 Black-owned restaurants in the Cleveland area have each received $10,000, as well as training, mentorship and support services, Obi said.
“They go through an intense, four-month program,” Obi said. “After they graduate, we give them a stipend to help them solve a problem in their business. Maybe it’s buying a piece of equipment or opening a new location, that kind of thing.”
The Sherwin Williams Construction Accelerator Program is in its second year of boosting minority-owned construction contractors. The company and the Urban League announced the program in May 2022. The previous fall, Sherwin Williams disputed charges that it had not done enough to involve black contractors in the construction of the company’s new downtown headquarters.
Ten minority contractors graduated from the accelerator program in 2023. A 2024 cohort is underway, and another is planned in 2025. Sherwin Williams, and more recently the Cleveland Browns and Bedrock, owners of Tower City, have supplied funding for the program. All three businesses have major construction projects underway or planned, and the Urban League wants to ensure minority-owned contractors are positioned to benefit. The program delivers training, mentorship, back-office support and access to capital, among other opportunities, to contractors.
Fourteen entrepreneurs went through the Black Women in Retail Accelerator Program last year. The local Urban League was one of five affiliates nationwide to launch the three-year program thanks to grants from Walmart, in collaboration with the National Urban League.
Participants learned how to pitch and position their products for the shelves of retailers like Target, Walmart, Meijer’s, and Macy’s, and how to scale up manufacturing. So far, four of the program graduates are selling their wares, including wine accessories and body care products, at the new Meijer’s store in Cleveland’s Fairfax neighborhood. The program culminated with a pitch competition for participants and a $2,500 prize won by Idayat Sambo, owner of Covermecutee, a maker of women’s clothing, including fashions for Muslim women.
Big things to come
Mockabee credits Obi with the innovations and growth of the Entrepreneurship Center and the UBIZ fund. Obi said the programs have become a model for other Urban League affiliates.
“A lot of cities wish they have what we have here in Cleveland,’’ Obi said.
In fact, Cleveland is among only 13 Urban League affiliates nationwide to have Entrepreneurship Centers, which require about $500,000 a year to operate, according to Cy Richardson, Senior Vice President for Housing and Economics at the National Urban League.
Entrepreneurship Centers typically have significant fundraising ability, seasoned leadership, deep expertise, solid community partnerships and track records of growth, Richardson said.
The National Urban League has affirmed the Cleveland affiliate’s success by naming it to host the organization’s annual conference on July 16-19, 2025. Past conferences have drawn thousands of attendees and have a multimillion-dollar impact on host cities.
“There's going to be a big opportunity to showcase the kind of lending work that we're doing here in Cleveland on a national platform,” Mockabee said.
