TCF Bank pledged Thursday to lend small businesses and minorities $ 1 billion over the next five years, a move the Detroit-based bank president described as a “monumental” and “bold” bid to break Ancient barriers to capital that women and women entrepreneurs of color often face.
The bank is also investing $ 10 million in a grant program to help low-to-moderate-income home buyers with up to $ 3,000 in down payment assistance.
Both initiatives, which will be funded in part by the bank’s profits from the Paycheck Protection Program, are an intentional effort to address inequities and “systematic racism that has denied so many parts of the American dream,” Gary said. Torgow, CEO. at TCF Financial Corp.
“We really are striving to do something truly monumental because we believe the time is right to do it,” Torgow said in an interview with Crain’s.
Torgow announced the loan fund Thursday morning at a news conference in downtown Detroit with Mayor Mike Duggan; Wayne County Executive Warren Evans; the Rev. Wendell Anthony, president of the NAACP Detroit branch; and Sherita Smith, executive director of Grandmont Rosedale Development Corp., which is working with TCF Bank on development strategies under the plans of the city’s Strategic Neighborhood Fund.
For a Midwest regional bank with approximately $ 50 billion in assets, reserving $ 1 billion over five years for a specific group of borrowers is “a huge commitment,” Torgow said.
In any normal year, the bank lends between $ 700 million and $ 800 million in commercial capital, with about $ 100 million going to minority-owned companies, Torgow said.
“I told someone we were doing this and he said, ‘Did you say B for a billion or M?'” Torgow said. “I said ‘B for a billion.'”
TCF Bank will make the loan fund available to racial minorities and women-owned businesses in its major markets in Detroit, Minneapolis, Chicago, Cleveland, Grand Rapids and Flint.
“A lot of this will focus on Detroit and Michigan,” said Torgow.
TCF Bank is not committing a specific percentage of the $ 1 billion in capital to Detroit or Michigan. Eligible companies will be able to borrow up to $ 1 million from the loan fund.
“We feel that with $ 1 billion we can answer many calls,” said Torgow. “So we really don’t need to divide it.”
African-American or African-American-owned businesses are slightly more likely to have applied for bank financing than white-owned businesses, but less than 47 percent of black applicants are approved, versus more than 75 percent of applicants. whites, according to a 2017 Federal Reserve report on credit availability for small businesses. The credit application data comes from an annual survey of entrepreneurs conducted in 2014 by the US Census Bureau.
Financing and housing discrimination go back generations.
“This has been a problem, long before I was in the banking business … This is a problem that has evolved through the banking system,” Torgow said at the press conference.
In announcing this loan commitment, TCF Bank recognizes the past of the banking industry and what can be changed, he said.
Debt is not always a preferred response for small businesses, especially those that may not see the income to pay off loans due to the pandemic or do not qualify for financing. Earnings projections are not easy to make during the ebbs and flows of the COVID-19 outbreak, and spending has increased for security equipment.
“We hope this is a very temporary situation, and with the programs that exist, we hope that they will continue to help those who are really struggling …” Torgow said.
