D.C.’s new Commercial Acquisition Fund will help small business owners who typically lack access to capital purchase their properties or put down payments on new ones. The goal is to empower “socially disadvantaged” entrepreneurs, including women and BIPOC, to stay rooted in D.C. and preserve the city’s culture.
The D.C. Council included the Commercial Acquisition Fund in the budget it recently passed. Eligible District residents can apply for grants of up to $750,000 or 25 percent of the total acquisition cost, whichever is lower. With only $4 million allocated to the fund, there’s a limit on how many businesses like restaurants and retailers it can help. Ward 5 Councilmember Kenyan McDuffie pushed for $10 million for the program.
“The downpayment assistance helps to break down the barriers to access to capital and unlock wealth opportunities,” McDuffie says. Owners won’t be the only ones to benefit. “If these folks are able to purchase their buildings, refinance, and expand they can hire more people. The people Black-owned businesses typically hire are minority residents.”
Systemic racism has long made capital less accessible for entrepreneurs of color. Some can’t always turn to friends and family for large investment sums and sometimes banks shut them out of traditional loans. Credit is part of the problem. Capital Area Asset Builders CEO Joseph Leitmann-Santa Cruz says one in five adults in D.C. were credit invisible before the pandemic.
“Anytime their credit score is run, no information shows up,” he told City Paper earlier this year. “The majority of them are Black and Brown.” This statistic doesn’t even take undocumented residents who make up 5 percent of the population into account. The pandemic, Leitmann-Santa Cruz argues, has only exacerbated the situation.
The Office of the Deputy Mayor for Planning and Economic Development will administer the fund and McDuffie hopes applications will open soon after the 2022 fiscal year begins in October. He’s worked with DMPED on other programs with similar goals, like the city’s Equity Impact Fund. The Commercial Acquisition Fund will play off of the Equity Impact Fund by using the same “economically disadvantaged” and “socially disadvantaged” eligibility criteria.
Per D.C. code, an economically disadvantaged individual means “someone whose ability to compete in the free enterprise system is impaired because of diminished opportunities to obtain capital and credit as compared to others in the same line of business where such impairment is related to the individual’s status as socially disadvantaged.” And a socially disadvantaged person is someone who “has reason to believe that the individual has been subjected to prejudice or bias because of his or her identity as a member of a group without regard to his or her qualities as an individual.”
LeGreg Harrison, a fourth generation Washingtonian, plans to apply. He co-owns The Museum DC with Muhammad Hill. The duo’s background is in the music industry. They opened their streetwear apparel store in 2016 after returning from being on the road with Wale. “Growing up in the city in the ’90s, we saw at least 10 to 15 brick-and-mortar streetwear apparel companies that were here,” Harrison says. “When we got back from being on tour, there was only one or two left. We decided to take some action.”
Finding a space wasn’t easy. They finally landed at 2014 Rhode Island Ave. NE where they’re currently leasing space. “It was a fight,” Harrison says. “Nobody would lease to us. It’s very hard to try and buy commercial property in this city. Everything is super high—it wasn’t in our range.” Since opening they’ve become influential community members and have hired about 12 employees. “We have a ton of jobs created from us being there. And then there’s the give-back.” They’ve hosted turkey drives, given out free haircuts, and even footed the bill for some funerals.
“Since we have that connection, this fund would help us stay connected by continuing to allow us to have equity in the property that we’re able to purchase,” Harrison continues. He’s from Southeast and Hill is from Northwest. “We’ve done our share unifying the city. It would really be advantageous for a company like us to be part of this initiative because we have the eye and ear of almost the entire city.”
McDuffie expects the lion’s share of applicants like Harrison to come from Wards 5, 7, and 8. “I want to help [DMPED] hone in on areas around D.C. that are ripe for commercial gentrification and displacement of existing minority-owned businesses,” he says. But there are neighborhoods in all wards that have business owners who would benefit from Commercial Acquisition Fund assistance like The Spice Suite in Takoma in Ward 4.
Angel Gregorio has owned the popular spice shop for six years and leases from a landlord who she says has owned the property for decades. He doesn’t have any interest in selling, according to Gregorio, so if she applies for a Commercial Acquisition Fund grant, she would put the money toward a downpayment on a new location. Owning property would give her security and stability.
“I want to know I can maintain a business in this city I was born and raised in,” she says. Her family still lives near the current Spice Suite. “I couldn’t afford to purchase without support. I can qualify for loans similar to how we can all qualify for student loans, but who wants a loan when grants are available to help you live more comfortably and build out the space? There’s the flexibility to make this what I want it to be more quickly.”
Grants are forgiven after seven years. Once certain conditions are met, the lien disappears. If an owner looks to sell the property or a business owner ceases operations within the first seven years after receiving a grant, the city can take back the value of the grant.
Gregorio agrees with others that the program will help address the lack of access to Black business owners, especially in an expensive city. “It’s not a couple hundred thousand dollars to buy a space, it can be upwards of more than a million dollars in D.C. proper. If it’s your first time acquiring commercial property, banks don’t want to take a risk on you. A grant would bridge that gap.” Getting $500,000 to put toward a $1.5 million property, Gregorio says, strengthens your loan application and profile and gets your foot in the door.”
If there was one thing Gregorio would change about the Commercial Acquisition Fund it would be funneling in more cash so more people can partake. “More money is always great,” she says, noting how appreciative she is that the program was funded at all. “It’s been a lot of promises and nice words about places that have been able to sustain themselves, but this is saying, ‘Let us help you stay here.’”
McDuffie hopes his colleagues in other sectors will step up to help entrepreneurs become fixtures in their communities, free from the threat of being pushed out. He says, “It’s important coming out of the pandemic that the government and leaders across other sectors like banking and philanthropy work together to address systemic barriers and build an economy that reflects the District’s beautiful diversity.”
Originally Appeared Here