Gary Cunningham’s Metropolitan Economic Development Association (Meda) is raising the capital it will take to increase Meda’s loan fund to minority entrepreneurs to about $20 million.
Most recently, the Otto Bremer Trust invested an addition $1 million in capital, on top of Bremer’s investment of $2 million last year that Meda used to support loans to 40 minority businesses that support 650-plus jobs.
“We’ve expanded the loan fund by $7 million, with about $5 million to go,” said CEO Cunningham of the nonprofit business consultant and financier that has helped launch or assist a few thousand small business over the last 45 years.
“Bremer has created an equity-like, longer-term fund for patient investors,” Cunningham said. “Our existing loan funds make shorter-term loans. Some of our businesses needed longer-term investments. They also gave us a $200,000 grant that will help our staff support these businesses. And Bremer saw that we had not one delinquency on the resources they [previously] provided.”
Two businesses that have benefitted from the Bremer investment are Sole Essentials, a safety-equipment supplier of steel-toe boots and orthopedic shoes and Native Concrete & Masonry, a Native-American owned contractor.
Meda, funded by banks, foundations and corporations, is a growing player in building small minority companies, many of which become successful enough to be banked by commercial lenders as they build sales and equity. And minority entrepreneurship and ownership has been identified as key to an expanding Minnesota economy. Minority businesses are the fastest growing segment of new businesses in Minnesota, but these small entrepreneurs often need early-years coaching and investments to get them to operational and financial stability.
The Meda portfolio has a loan-default rate that rivals that of many community banks.