After pledge, TCF Bank offers $1 billion in loans to minority-owned businesses
TCF Financial Corp. will offer $1 billion to minority- and women-owned small businesses and $10 million in grants to low-income home buyers.
The Detroit-based bank program said Thursday it is a first public step after committing with the city's eight other largest companies to reject all forms of racism, sexism and violence and seek change in the criminal justice system following nationwide protests in the wake of the death of Minneapolis man George Floyd after improper conduct by police officers.
"These programs address the systemic racism that has denied too many their piece of the American dream, the opportunity to own a business, and the ability to own a home," Gary Torgow, TCF executive chairman, said during a news conference. "Today, we humbly strengthen our commitment to right historic wrongs with a loan program audacious in its size and ambition."
The five-year programs will offer up to $1 million loans to the small businesses. The program will be open nationwide, though TCF plans will focus its efforts in Detroit, Minneapolis, St. Paul, Chicago, Cleveland, Grand Rapids and other key cities in its markets.
"This means dramatically more access to people and communities long denied their fair share," said Torgow, noting black business owners are twice as likely to be rejected for loans and far more likely to be refused full funding.
Terms of the loans have yet to be set, but the bank is aware it needs to offer rates that are favorable for the communities and businesses it will be serving, TCF spokeswoman Randi Berris said. Further details on how to apply also will be made available soon.
Qualified home buyers for its Heart and Home program can receive up to $3,000 without repayment if they earn less than 80% of the area median income or purchase homes in a low-to-moderate income census tract. The bank hopes to fund 750 of these grants in 2020, more than double the roughly 300 it granted last year.
The funds seek to provide a pathway to stabilizing neighborhoods by providing funds for a down payment that is the "single largest hurdle to home ownership," TCF CEO Craig Dahl said in a statement.
TCF expects to fund the initiatives through profits from the 16,000 Paycheck Protection Program loans it offered amid the COVID-19 pandemic. More than half were in Michigan.
Detroit Mayor Mike Duggan noted that the city is one of the few places historically where African Americans could build wealth. Previous commitments by TCF's leadership have helped to do so again.
And last year, it acquired in a $33 million deal the naming rights of the Cobo Center convention hall downtown. "They replaced their name of our convention center from somebody who drove African Americans out of their homes," Duggan said, "to the name of an institution making black homeownership accessible again."
The programs are an extension of previous commitments by the bank since its predecessor, Chemical Financial Corp. decided in 2018 to move its headquarters into a $105 million 20-story, mixed-use building on Woodward Avenue downtown near Comerica Park.
"Not only are you building a new house to place your headquarters in the heart of downtown Detroit, you really are establishing a new home," said the Rev. Wendell Anthony, president of the NAACP's Detroit chapter who inspired the companies to take their public pledges in June. "For it is from the home that individuals grow, prosper and fulfill their purpose. Your commitment to strategic partnerships, philanthropy and service sets a prime example."
Prior to its merger with TCF, Chemical also brought together seven corporations to support the Strategic Neighborhood Fund by each adopting a neighborhood and supporting the city's development work there with a $5 million financial commitment.
TCF adopted the Grandmont Rosedale neighborhood, where a bookstore, art gallery, bridal shop, grooming center, coffee shop and more have opened.
"All of this was put at risk with COVID-19, but with a commitment like this, we believe our community will continue to thrive," said Sherita Smith, executive director of the Grandmont Rosedale Development Corp. "While there are a number of challenges to owning and operating a small business, without fail, these savvy and persistent entrepreneurs will tell you that access to capital is the No. 1 challenge. This challenge can be especially daunting for minority-owned businesses."
In conjunction with Wayne County in March, TCF also offered a $10 million loan program to provide fast relief through low-interest loans to support local small businesses affected by the pandemic. It put cash in their hands within a week when federal funds were coming slowly, Wayne County Chief Executive Warren Evans said.
"Because of that partnership, we were able to get millions of dollars into the hands of hundreds of small businesses," he said. "Public-private partnerships like this are the key to successfully moving forward and thriving as a region."
That program inspired this next step TCF is taking, Torgow said.
"But for most of us," he said, "this is a moment to recognize that none of us will be truly free until all of us are truly equal."