‘Activate Detroit’ Loan Helps Open Bagley Restaurant in Detroit

Never say never to Jamaal Muhammad. Unless you want to see him succeed.

“A high school teacher once told me I’d never go to college and, if I did, I’d fail,” recalled Muhammad, now a college graduate, a high school administrator and a thriving small business entrepreneur in Detroit, Michigan. “I’m the kind of guy who if you tell me I can’t, I double down on commitment.”

Of the 11 children in his family, Muhammad is the only one who earned a college degree – and he did it in less than four years. He’s also the only one who parlayed his cooking talents learned in his mother’s kitchen into a prospering venture called Supreme Cafe.

At his business, Muhammad’s mission is to meet the needs of a community struggling in a “food desert,” where national grocery stores have deserted the area, leaving residents mostly with convenience stores and fast-food eateries to meet their daily food needs. When preparing all his menu items – including sandwiches, burgers, tacos and wraps – Muhammad uses only natural, organic ingredients with vegan options.

Since Muhammad launched Supreme Cafe, it’s been a mobile venture. He’s leveraged catering services, pop-up shops and online sales to make ends meet, while still finding ways to donate food to the elderly, homeless and youth.

Sweat Equity and Passion Attract Unique Funding

Muhammad now has plans to open his first brick-and-mortar location on Detroit’s west side. Muhammad will open his cafe in the Bagley neighborhood thanks to a grant he won from the Detroit Economic Growth Corporation’s Motor City Match program and a unique loan from the mission-based nonprofit lender CDC Small Business Finance.

CDC Small Business Finance offers an innovative character-based lending program called “Activate Detroit,” designed specifically for small business owners like Muhammad who want more than just capital investment – they want to help their communities thrive. Receiving such financial support at the beginning of 2022 turned out to be emotionally overwhelming for Muhammad.

“I think I cried more than ever before,” he admitted. “I was just so grateful to all the people who believed in me.”

Nimaj Driscoll, the loan officer who helped Muhammad apply for the Activate Detroit loan, was not surprised the young entrepreneur was approved for the financing.

“He was extremely committed to the process, working into the middle of the night on occasion,” Driscoll said. “It spoke loudly about his character.”

Overcoming Bias to Make a Powerful Impact

Indeed, character is one of the unique features of the Activate Detroit loans, developed exclusively in this pilot phase for Black small business owners in metro Detroit (Macomb, Wayne and Oakland counties). Another key attribute is to not consider a borrower’s credit score when considering them for a loan.

Instead, loan experts at CDC Small Business Finance are trained to listen to an entrepreneur’s whole story, with an ear especially attuned to sweat equity, demonstrated passion and a commitment to the business. Working with Muhammad was a perfect example.

As a young entrepreneur he had very little in the way of liquidity, as he had not yet had the opportunity to accrue significant assets or savings. He put all of his extra money into building Supreme Cafe. He also had some personal debt for things like auto and student loans that he was working to pay off.

“On paper,” Muhammad may have been seen as too risky for a traditional lender, but the team at CDC saw his potential. They paired him with Donell Miles, a member of CDC’s Business Advisory Team, to provide free services, including working through his projections and assumptions for revenue.

“Black-owned businesses often have a unique set of challenges that most traditional financial institutions don’t want to take a chance on, or take the time to understand the cultural impact these businesses have in the community,” noted Driscoll. “We realized this left a real void in the ability for Black entrepreneurs to bring jobs and opportunities to their communities. Through Activate Detroit we are rethinking what it means to be a good candidate for a loan by really getting to know the borrower and seeing their potential.”

The key features of the Activate Detroit loan are so different from any product offered by traditional lenders that most small business owners find it hard to believe. They include:

• Credit scoring is blinded; no minimum FICO score is required
• A heavy emphasis on the small business owner character
• No down-payment required
• Flexible repayment
• Simplified, streamlined application process
• Complimentary pre- and post-loan business advising

“In developing the Activate Detroit loan, we had to face the reality that there is racial bias – both intentional and unintentional – in traditional systems that provide access to capital,” said Ellis Carr, president and chief executive officer of CDC Small Business Finance and Capital Impact Partners. “Too often, Black small business owners fall through the traditional lending cracks and are taken advantage of by predatory, high-interest lenders.”

Black-owned businesses rarely get all the financing they’re seeking. It happened just 31% of the time in 2018, according to the Federal Reserve Bank of Atlanta. That trailed behind businesses whose owners identified as Latino (35%), Asian (39%), or White (49%).

And they were denied altogether more often: 38% of the time for Black-owned small businesses, compared with businesses whose owners identified as Latino (33%), Asian (24%) and White (20%).

It’s no wonder, then, that Black business owners are far less likely to even seek a loan than White business owners because they think they will be turned down, according to a recent survey by the New York Federal Reserve. That was true well before the pandemic. When relief funds went out, areas with significant numbers of Black-owned businesses such as Wayne County received surprisingly little assistance. Racial bias has also long had an impact on the many factors that feed into a credit score.

“We wanted to create a product that is anti-status quo,” Carr added. “Activate Detroit is a solution that we hope will be more equitable and inclusive – and will help break a cycle of distrust and disenfranchisement.”

Muhammad plans to use his Activate Detroit loan proceeds to buy equipment and initial inventory for his permanent Supreme Cafe home. He has his eyes on a convection oven, ventilation hood system, two fryers, gas griddle, fryer rack, sandwich prep station and signage. And of course, he’ll use some of the money to pay his seven employees, a team he hopes to grow to 30 or 40 in a few months.

“At the end of the day, I love putting smiles on people’s faces with my food,” Muhammad said “I have a dream and love in my heart for helping people whatever way I can – and being able to use my business to help out my community has really been a blessing.”

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