Knight Foundation converts $2.5M loan to grant for Detroit Development Fund
Convincing a skeptical landlord that women like pedicures and new shoes, ideally in combination, was far more difficult for Ayanna Williams-Jones than getting a loan to open her business in downtown Detroit.
The Detroit Development Fund took a chance on Williams-Jones, despite her having a personal bankruptcy in her past, loaning her $40,000 to help open Pedicure & Shoes 2 Go on Congress Street, not far from the Joe Louis Arena.
But it was also Williams-Jones’ perseverance that inspired confidence. The Great Recession had gutted her family’s savings, and her husband, Eric Jones, lost his job, forcing them to declare personal bankruptcy. In 2013, Williams-Jones put herself through an entrepreneurial boot camp and pitched the idea for her store in front of Ray Waters, president of the fund. He connected her with Lifeline Consulting, a business coach that helped her put together a solid plan that reflected her competence.
Waters also saw that Williams-Jones was working herself back to financial solvency – even if her credit score wasn’t good enough to qualify for a loan from a traditional bank. He put her in touch with the Detroit Microenterprise Fund, a Detroit Development Fund partnership with Huntington Bank, and it loaned her $20,000. Then the Detroit Development Fund came in with $40,000.
Williams-Jones “plugged away,” says Waters. He met with the couple, explored the reasons behind the bankruptcy, and was satisfied that they could meet the loan payments.
Williams-Jones, 38, put up her house as collateral. She plans to continue working as an analyst at GM full time, while her sister, Kendra Patterson, manages the business. “We spent time with her and watched her move through the last two years,” Waters says. “She persevered and remained upbeat even with so many challenges. You have to get to know somebody. This is a character lending.”
This is also enlightened self-interest, an idealist’s vision of what capitalism should be. As one of a handful of community development funding institutions in Detroit—CDFIs lend credit to underserved and distressed communities to promote economic development—the fund is seeing big success in small and large ventures, from the shoe store to restaurants to major and modest housing developments (more than 1,400 units). Its investments have generated 1,800 jobs and kept another 1,200 in place, Waters says.
The fund’s focus and its commitment to minority business development is the central reason it has the support of Knight Foundation, which recently announced its conversion of a $2.5 million loan to the fund to a grant. By removing the debt from the books, Knight is helping strengthen the fund’s lending power, says Katy Locker, Knight’s program director in Detroit.
“While there are increasingly new lenders arriving in Detroit’s marketplace as we get more investment interest from across the country, there are only a few CDFIs in Detroit that have been here and know our community well,” Locker. “They have survived the boom and the bust we have seen in the last 10 to 15 years and I think it matters to have that local context.”