Macy’s, the largest department store in the United States, announced it will invest $30 million over the next five years to support minority-owned retail businesses.
The New York Times reports that Macy’s is working with Momentus Capital to invest the money in three funding channels that support retail businesses run by underrepresented groups. Total funding for the programs is $200 million, according to Macy’s.
The money will be offered in the form of working capital, commercial real estate and growth capital loans. In addition to supporting minority businesses, the program will help increase Macy’s profits by expanding and diversifying its supplier base to customers.
“In many of these endeavors, they are starting points to help,” Jessica Ramirez, a retail research analyst at Jane Hali & Associates told the Times. “We just have to see with the times.”
Access to capital is one of the biggest hurdles for minority entrepreneurs and business owners. Many cannot get funding for startup costs, emergencies, and scaling their business. Black, Hispanic and female business owners receive less than 5% of venture capital funding, according to the Times.
The brick-and-mortar retail giant has been trying to diversify its vendor base for several years, launching the Mission Every One program, which will spend $5 billion by 2025 to promote diversity and sustainability in retail. The retail giant also signed the Fifteen Percent Pledge.
“We have emphasized a holistic approach to supporting Black businesses, which means we work closely with retailers to identify opportunities that go beyond just expanding shelf space to break down barriers that have systematically held Black entrepreneurs back. ” LaToya Williams Belfortthe executive director of 15 Percent Pledge said in an email.
Many companies and corporations such as Macy’s have attempted to fill the funding gap for entrepreneurs and minority businesses, but have found that simply giving money is not enough.
Many companies have started business accelerator programs that not only provide financing to minority businesses, but also help minority entrepreneurs grow their businesses with technological advances, support, business advice, feedback, and to meet other minority businesses with whom they can work work and collaborate.