Northwestern Mutual is investing $5 million in two Black-led, Milwaukee-based community development financial institutions to increase access to capital for Black and African American businesses.

The company will partner with Legacy Redevelopment Corp. and Northwest Side Community Development Corp. to fuel small business growth and economic vitality in the Milwaukee community.

"Northwestern Mutual has a legacy of investing in the communities we proudly serve, particularly in our hometown of Milwaukee," Ray Manista, the company's executive vice president and chief legal and compliance officer, said in a statement.

"Black and African American business owners, for a variety of reasons, have had limited access to traditional financial markets, and this latest investment will deepen our mission to make a bold and long-term impact that drives access and equity."

According to the 2021 Black Business Owner Spotlight, 56% of Black entrepreneurs reported access to capital as a recurrent obstacle, often limiting their ability to expand their businesses.

Northwestern Mutual created the Sustained Action for Racial Equity task force in July 2020, launching a $100 million impact fund to directly invest in Black and African American communities nationwide.

The fund focuses on three key opportunities: building physical and social infrastructure, increasing access to capital, and creating healthy sustainable neighborhoods and communities.

More: Northwestern Mutual is launching a $100 million impact investing fund for Black communities

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The racial wealth gap in the U.S. is significant, and that inequality is particularly evident among Milwaukee's Black residents.

Black-owned businesses are denied loans at twice the rate of their counterparts. Without the ability to access capital, businesses in underserved communities are often unable to gain the resources they require to build capacity and plan for growth.

In Milwaukee, where traditional, Black-led banks are not available, community development financial institutions, or CDFIs, provide financing, business education, one-on-one technical assistance, and credit structures to both mitigate investment risk and support business success to allow small businesses to become more bank-ready.

LRC, led by President and CEO Terese Caro, provides strategic financial solutions for small businesses and nonprofits in the city's underserved markets. NWSCDC, led by Executive Director Willie Smith, is based on Milwaukee's northwest side and collaborates with businesses to build stronger neighborhoods, create economic growth, and encourage urban environmental improvements.

"We're thrilled to partner with Northwestern Mutual and provide much-needed loans to local, Black and African American-owned businesses," Caro said.

"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."

Corrinne Hess can be reached at chess@gannett.com. Follow her @corrihess

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This article originally appeared on Milwaukee Journal Sentinel: Northwestern Mutual investing $5M to help Milwaukee Black businesses