Wells Fargo has announced that it is donating its gross processing fees from the Paycheck Protection Program — approximately $400 million as of June 30 — in support of small businesses impacted by the COVID-19 pandemic.
Through its Open for Business Fund, the financial services company will support nonprofits working to provide capital and technical support to small businesses, with a focus on minority-owned enterprises. An initial $28 million will be awarded to community development financial institutions (CDFIs) working with Black-owned businesses, which have been disproportionately impacted by the public health emergency. According to the National Bureau of Economic Research, 41 percent of African-American businesses nationwide had permanently closed by the end of April, nearly twice the 22 percent rate for all small businesses.
The first grantees of the fund include the Expanding Black Business Credit Initiative, in support of its Black Vision Fund, which is focused on increasing the supply of capital to Black-focused CDFIs; and the Local Initiatives Support Corporation (LISC), which will partner with Kiva to provide grants and low-cost capital to more than twenty-eight hundred entrepreneurs, with a focus on preventing revenue losses, preserving jobs, and avoiding small business closures.
"By donating approximately $400 million in processing fees to assist small businesses in need, Wells Fargo's Open for Business Fund creates opportunities for near-term access to capital and addresses the road ahead to meaningful economic recovery, especially for Black and African-American entrepreneurs and other minority-owned businesses," said Wells Fargo CEO Charlie Scharf. "Wells Fargo is committed to helping small businesses impacted by COVID-19 stay open and get back to growth."
The fund currently is accepting applications from CDFIs and special purpose funds formed by CDFIs serving racially and ethnically diverse small businesses. Additional grant cycles focused on technical assistance and recovery will be announced later this year.