Small businesses need capital to grow and thrive. But obtaining that capital can be difficult, especially for Black-owned businesses.
According to a recent study, 56 percent of Black entrepreneurs said challenges accessing capital have limited the growth of their businesses. And even among firms with good credit scores, Black-owned firms were half as likely as white-owned firms to receive all of the financing they sought (24% versus 48%), according to a Federal Reserve study.
The American Council of Life Insurers and its member companies have pledged to drive solutions to address systemic inequality. Through its Economic Empowerment and Racial Equity Initiative, life insurers are taking tangible steps to help more Black entrepreneurs enhance their family’s prosperity and financial security across generations.
A prime example is Northwestern Mutual’s recent $5 million investment in two Black-led Community Development Financial Institutions (CDFIs) in Milwaukee: Legacy Redevelopment Corporation (LRC) and Northwest Side Community Development Corporation (NWSCDC). Northwestern Mutual’s investment will help these CDFIs provide vital financing to small businesses that have barriers receiving funding from traditional banks. In addition, the CDFIs offer business education, hands-on technical assistance, and credit structures to lessen investment risk and support business success.
LRC President and CEO Terese Caro praised Northwestern Mutual’s investment.
“This partnership will change the trajectory of LRC and NWSCDC in terms of what we’ll be able to do and the communities we’ll be able to impact,” Caro said.
Northwestern Mutual’s investment in the CDFIs is an outcome from the company’s Sustained Action for Racial Equity (SARE) task force, which since its founding in 2020 has pursued actions and initiatives to drive sustainable change. For example, last year Northwestern Mutual launched a $100 million impact fund that directs investments to Black and African American communities across the nation. The fund focuses on three opportunities: building physical and social infrastructure, increasing access to capital, and creating healthy sustainable neighborhoods and communities.
America’s life insurers are committed to achieve greater economic empowerment in financially underserved communities and bridge racial and socioeconomic divides across the country. Through strategic investments like these, Northwestern Mutual and the life insurance industry are helping to build a better, more equitable path to prosperity for all Americans.
Evan Reed is Impact Investment Strategy Senior Director at Northwestern Mutual.
