Detroit is regenerating its commercial corridors by helping entrepreneurs launch businesses in blighted areas. Through Motor City Match, entrepreneurs and building owners receive both technical and financial assistance, including grants of up to $100,000 for capital or renovation. More than 75% of the 60 businesses awarded grants are owned by women or minorities.
Results & Impact
As of April 2017, Motor City Match had distributed approximately $3 million to more than 60 businesses. More than 75% of the businesses that were awarded grants are owned by women or minorities.
City of Detroit, Detroit Economic Growth Corporation, Economic Development Corporation of the City of Detroit, US Department of Housing and Urban Development, Invest Detroit, Detroit Development Fund, Detroit Micro-Enterprise Fund, Michigan Women's Foundation, Detroit LISC, NCB Capital
Motor City Match is run by the Development Corporation of the City of Detroit, and the Detroit Economic Growth Corporation contribute staff. The US Department of Housing and Urban Development provide funding for technical support services through the Community Development Block Grants scheme. Loans are provided by six locally based microloan companies, and grant funding is provided by private philanthropic groups. To be eligible, businesses and property owners must demonstrate how their enterprises would support either low- to-moderate income communities or combat the city's blight problem. In addition, entrepreneurs must commit to establishing their business in Detroit for at least two years. Applicants are assessed on their scores across five criteria relating to their potential benefit to the city and the viability of their business and/or building.
Low-income people, ethnic minorities, women, entrepreneurs
Cost & Value
Running since 2015
The lower-level "awards" provided by Motor City Match largely consist of advice on crafting business plans and technical assistance, such as advice on carrying out renovations and cost estimates. This type of support may not be sufficient to help applicants whose main issue is lack of financing. For example, unless a building owner has a tenancy agreed, they are not eligible for funding to carry out redevelopments that may be badly needed. While successful applicants can receive technical support, their ability to act upon the advice is dependent on them obtaining the finance themselves.
Detroit is fighting blight and supporting low-income neighbourhoods by connecting the owners of vacant commercial property with high-potential businesses.
The Motor City Match (MCM) scheme aims to help businesses get started in Detroit, find the best premises and plug funding gaps preventing building and business owners from carrying out refurbishments. The program does this by bringing together a range of public and private partners to make financial and technical assistance available to selected businesses. This is delivered in the form of grants and loans, redesigning office space, business coaching and matching entrepreneurs with vacant commercial premises.
As of April 2017, MCM had dispersed approximately $3 million to more than 60 businesses, while the amount of investment it has leveraged is even higher. Success stories include a support centre for artists, a boutique jewellery store and more conventional enterprises such as restaurants and IT businesses. More than 75% of businesses that received funding have been owned by minorities and over half have been minority-women owned.
Blight became increasingly problematic in Detroit in the wake of the 2008 crash. Following Detroit’s 2013 bankruptcy filing, the Obama administration established the Detroit Blight Removal taskforce, which placed the number of commercial or communal buildings suffering from blight at just below 5,500 out of a total of more than 84,500 blighted properties or vacant lots. Mayor Mike Duggan came to power the same year pledging a major crackdown on blight and to stem the city’s population decline.
MCM, launched in 2015, is the centrepiece of Detroit’s strategy. It is designed exclusively to support projects located either in low- and moderate-income areas or blighted parts of the city. It aims to regenerate business corridors by addressing two problems: the difficulty for businesses to locate office space best suited for their needs and the financial and technical difficulties of getting it ready once found.
To do this, the scheme provides four levels of awards on a quarterly basis to cater for entrepreneurs and building owners at different stages of the process. The first of the four stages is known as the “get ready level,” whereby successful building owners and businesses are listed on the MCM website. This provides greater exposure for businesses looking for commercial property to let and building owners looking for tenants. While any building owner who meets the eligibility criteria will be listed, the business shortlist is limited to 50 per quarter. For businesses, this stage also includes free coaching to design a business plan and establish an enterprise and is intended for entrepreneurs just starting out.
Beyond the “get ready level,” building owners and entrepreneurs receive direct support to actively bring about a leasing arrangement. The second award level is known as “make a match,” and is limited to 25 businesses and commercial properties. Each selected building is designated as a “top destination for new business” and matched directly with one of the 25 selected companies. Both parties receive technical assistance, including support on financial planning and advice on leasing processes. The third level, “make a plan,” is designed for businesses and property owners who have already arranged a tenancy but are held back by planning and renovation requirements. In addition to the assistance provided at level two, parties chosen for the “make a plan” award receive support to design renovations and plan for their costs, as well as having any legal permits approved more quickly.
The top level award, “match your cash,” offers grants of up to $100,000 per quarter for ten building and business owners who have been unable to obtain the necessary finance to start operating from private capital. These can be used to meet the cost of renovations and building improvements, building inventories or for working capital and require applicants to demonstrate estimates of the expenditure required to undertake the work. Applicants first apply for a loan to the six private lenders involved in MCM, although they only need to submit one application, which is then reviewed by all six parties. If applicants fail to receive all the money they need, MCM considers them for matching grants of up to $100,000 provided by private and business philanthropic groups. Applicants can only receive the same amount in grants as they have in funds to invest. Grants are delivered in the form of draw-down funds with the recipient first spending their own money and being reimbursed through the grant allowance. Up to ten grants are awarded each round from a total pot of $500,000.
To be chosen, applicants must first demonstrate that their business or building would benefit a low to middle-income community and/or reduce the city’s blight problem. New businesses must agree to reside in Detroit for a minimum of two years. Once they have been deemed eligible, applicants are selected according to how well they score over five criteria, which are slightly different for entrepreneurs and building owners. For the former, they are graded on the thoroughness of their vision for the business, the ability of their staff, their potential to generate demand and revitalise an area, how well supported the initiative is among the local community and the business owner’s ability to attract additional investment into the area. Building owners are graded on the characteristics of their office space and plans to aid the business, the state of the building’s structure and systems, support from the community and other businesses for the new activity, the ability of the building owner to attract additional investment and the building owner’s compliance with legal standards and payment of taxes. Each category is worth 20 points with the perfect score being 100.
The scheme itself is made by possible by a network of partnerships between public and private actors. MCM is run by the Development Corporation of the City of Detroit while the Detroit Economic Growth Corporation contribute staff. The US Department of Housing and Urban Development provides funding for technical support services alongside Community Development Block Grants. Loans are provided by six locally based micro-loan companies while grant funding is provided by private philanthropic groups.
In recognition of MCM’s success, the January 2017 award ceremony was attended by VicePresident Joe Biden. MCM receives roughly 300 applications from businesses each cycle.
(Picture credit: Pexels/David McBee)