UBS is committed to delivering its financial and intellectual capital to enable small businesses to grow, create jobs, and develop more enterprising local communities. Through Elevating Entrepreneurs, UBS provides small business owners with mentoring, access to capital, and education & networking opportunities. At CGI in 2012, UBS committed to include access to capital to its Elevating Entrepreneurs offerings as a supplement to the existing small business mentoring program. Building off of the success of this previous commitment, UBS and VEDC are committing to expand access to capital with an additional million committed ( million total) to small businesses in four new markets. UBS is also committed to expanding the programmatic offerings and geographic reach of the Elevating Entrepreneurs mentoring and education & networking activities to fuel small business growth.
A significant component of the commitment will be to serve as the lead partner to VEDC to extend their lending capabilities from a regional to a national platform, deploying small business loans of ,000 to ,000. In addition, UBS will expand high-quality small business mentoring and education offerings to new markets. The commitment includes:
? Up to million total in lines of credit for small business loans in three new states: New York, New Jersey, Connecticut, with a planned expansion to another market. This includes the recent creation of the Tri-State Business Opportunity Fund.
o Existing lines of credit for small business loans continue in Los Angeles, Chicago, and more recently in Nevada and Utah.
? .5 million multi-year grant from UBS to VEDC for loan loss reserves and operational expenses
? Over in-kind contribution to VEDC for use of UBS office space in New York
Expanded Small Business Offerings:
? Education programming and networking events in new markets across the country including Detroit, Nashville, and Philadelphia
? Execution of UBS Ascent: Capital and Connections training events in Chicago
? Continuation of Elevating Entrepreneurs Small Business Mentoring Program (with UBS Financial Advisors and clients as mentors) in New York, Chicago and Los Angeles
The expanded partnership with VEDC will help them become one of the largest not-for-profit national transitional lenders in the country. The loan capital provided aims to serve 105 small businesses, is expected to contribute to the creation of 2,100 jobs, with a target of 50% of the loans going to women or minority-owned businesses and/or employing low and moderate income residents.
Steps toward achieving the lending and capacity building commitment have commenced.
? In December 2013, VEDC opened an office in New York City to support the Tri-State Business Opportunity Fund, in space donated by UBS.
? Currently implementing expansion to another market.
? VEDC expects to fulfill its lending commitment by the end of the 2016 calendar year. Benchmarks will be evaluated at end of each calendar year and will be tracked internally on a quarterly basis, at a minimum. The following milestones at the end of each of the follow years.
Anticipated loan volume per year, with targets on # small businesses impacted, jobs created and retained
? 2014 - million in loans to 20 small businesses, creation of 400 jobs
? 2015 - million in loans to 35 small businesses, creation of 700 jobs
? 2016 - million in loans to 50 small businesses, creation of 1,000 jobs
Expanded small business offerings - anticipated timing and activities:
? Launch of NY Metro Small Business Mentoring Program in May 2014
? Launch of Chicago Small Business Mentoring Program in Q4 2014
? Launch of Los Angeles Small Business Mentoring Program in Q1 2015
? Education & Networking events in Chicago, Nashville, Philadelphia, Providence in 2014
Anticipated expansion of Education & Networking events in Cleveland, Detroit, Las Vegas, New Orleans in 2015-2016
Small businesses are recognized as the backbone of the American economy, accounting for 54% of all U.S. sales. Access to capital, critical for small business growth, continues to be a challenge for many businesses that want to grow, or simply sustain their operations. In particular, access to loan capital through traditional banks has significantly declined for small businesses over the past five years. This has been especially difficult for women and minority-owned firms.
The overall challenging lending environment has contributed to increased business closures, unemployment, and low morale within the entrepreneurial community. This has created a major gap in the market for small business lending beyond micro-loans (up to ,000) and below the level that most commercial banks fund ( million and over). Community Development Financial Institutions (CDFIs) aim to meet this important need, providing credit and financial services to communities underserved by mainstream commercial banks and lenders. Most operate on a local level and without capacity building support needed to sustain their operations.
Valley Economic Development Center (VEDC), a transitional small business lender and CDFI headquartered in Southern California, through its partnership with UBS, has laid the groundwork necessary to establish a new model for CDFI's - one with national lending reach, centralized operations, and the leverage and advantages delivered by efficiencies of scale.
In addition to capital, access to high-quality advising and education opportunities are seldom available to small businesses, both of which can be significant drivers to business growth. Further, businesses that receive three or more hours of mentoring report higher revenues and increased business growth (Score.org). Research from the UK reports that 70% of small businesses that receive mentoring survive for five years or more, double the rate compared with non-mentored entrepreneurs (Federation of Small Businesses).