The Cultivate Program: Capital and Coaching for LA's Young Entrepreneurs

Youth Economic Advancement (sponsored by the Conrad N. Hilton Foundation)

County of Los Angeles

Expand existing project, program, or initiative

Entrepreneurship is a courageous, challenging, and often necessary endeavor. But too often, entrepreneurs from underserved and underrepresented communities face barriers to accessing the capital (loans, investments, grants) and support they need to start and grow small businesses. Nearly 40% of Inclusive Action constituents have been denied a loan from a mainstream lender at least once. In many cases, entrepreneurs must turn to high-interest loans or other harmful lenders; one in three people Inclusive Action serves has taken at least one predatory loan in the past. For young adult entrepreneurs, these challenges are made worse by other barriers like being considered "unbankable," having limited or no credit history, and lacking the support systems they need. The specific population of young adults Inclusive Action serves also faces challenges resulting from their gender preferences, involvement in juvenile justice or foster systems, lack of stable housing, or immigration status.

Cultivate is a comprehensive program that provides funding, business coaching, and wraparound services to young adults ages 18 to 30 who are starting or growing their businesses and face systemic barriers to securing economic stability. Since launching its micro-finance programs in 2016, Inclusive Action has refined its lending and business coaching approach to better support low-income communities. This is why Inclusive Action pairs every loan with tailored business coaching and support and provides these services through a "whole-person" lens. This is the framework through which we created Cultivate. Cultivate supports participants in the following ways: - Loan Capital and "Supportive" Capital - Ultra Low-Interest loans help young entrepreneurs invest in their businesses and build their credit, while small business grants and participation stipends help students complete their training and jumpstart their businesses; - Cohort-based Entrepreneurship Training and 1:1 Business Coaching - 10-12 cohort workshops and tailored coaching help entrepreneurs build business, financial, and wellness skills and develop their business ideas and goals; - Mentorship and peer-to-peer support - Entrepreneurs learn from each other and are connected to more experienced entrepreneurs in their specific industry; - Wrap-around support - Inclusive Action works with local youth-serving organizations to provide wrap-around support to help meet a variety of needs.

Inclusive Action envisions a future where all low-income entrepreneurs and communities have the necessary resources and tools to build and maintain their businesses. Everyone deserves access to affordable capital and support to make their business goals come to life. To reach that future, Inclusive Action intends to prove that low-income entrepreneurs are worthy of investment without risking extremely high-interest rates and other predatory practices. In the short term, Cultivate seeks to provide impactful services to support young adults on their entrepreneurship journeys. Over the long term, however, we believe Cultivate can become a model in LA County and elsewhere for how fair and equitable lending and business coaching services can be done for this population of entrepreneurs. We also hope that larger financial institutions like traditional banks and Community Development Financial Institutions will consider Cultivate a scalable model for supporting young adult entrepreneurs.

Cultivate launched in 2022 with a cohort of 15 entrepreneurs. In the short-term, Cultivate impact metrics include: - # of entrepreneurs served; - Amount of capital provided; - # of workshops and business coaching hours provided; - # of businesses created or improved; and - # of business development outcomes achieved (such as permits obtained, businesses registered, etc.); Cultivate's long-term success will be measured through longitudinal outcomes and its impact on the broader financial services industry. Longitudinal outcomes include: - Credit score increases over time; - # of businesses sustained; and - # of jobs created by Culitvate businesses. Lastly, Cultivate also collects qualitative and quantitative data related to the emotional and financial well-being of participants, including: - # of clients who established credit for the first time, - # of clients who reduced total debt; and - # of clients who received wellness support from local youth-serving organizations.