Ford Motor Co., in conjunction with a Chicago-based Latino nonprofit advocacy group, plans to open 50 Hispanic-owned dealerships in five years.
Ford's dealer development program will work with Latino Initiatives for the Next Century and allow the agency's venture capital company, Millennium LMI, to lend money to prospective Hispanic dealers, said George Frame, Ford director of dealer development.
Ford's dealer development program calls for candidates to have at least 10 percent of the initial investment - which can run from $170,000 to $200,000 for a modest store - and Ford finances the rest. The guidelines require that the initial investment not be borrowed. But under this new partnership, Ford will allow Hispanic entrepreneurs to borrow some or all of the initial investment from Millennium.
'It's one source that we know, and it is not a traditional loan,' Frame said. 'Absent that, we do not allow that 10 percent to be borrowed.'
Rudy Mulder, chairman of both Latino Initiatives for the Next Century and Millennium, said Millennium will become an equity partner in the dealership until the loan is repaid. Mulder said there will be no lien against the dealership by Next Century.
The dealer is expected to pay back the money on a timetable that will depend on the loan amount and the store's volume, Mulder said. The amount of individual loans will vary but is expected to range from $500,000 to $1.5 million.
'We're investing in the individual,' Mulder said.
The groups have raised $170 million from private and corporate sources and will use it to help finance Hispanic entrepreneurs in many areas of business, not just Ford dealerships, Mulder said.
Frame said the company recognizes the importance of Hispanic consumers and for the past 18 months has put special emphasis on seeking out Hispanic candidates. Currently, 92 of Ford's 378 minority dealerships are owned by Hispanics. The numbers include Ford, Lincoln, Mercury, Jaguar, Volvo and Land Rover stores. In 1997, 67 of 352 Ford, Lincoln, Mercury and Jaguar minority dealerships were owned by Hispanic dealers. Ford did not own Volvo and Land Rover at that time.
'These are people who have been excluded from consideration because of a lack of capital,' Frame said. 'We're going to do some good.'
Ford still is committed to the other minority dealers in its program as well, he added.
Daniel Ramirez, owner of Ramirez Ford in Rio Grande City and chairman of the Ford Motor Minority Advisory Council, said that since Ford has its hands full with so many minority dealers losing money, it is good that another group has stepped in to help. He also said he hopes at some point the program would be extended to all minorities.
Civil rights leader the Rev. Jesse Jackson also praised Ford's alliance with Latino Initiatives for the Next Century. Said Jackson in a prepared statement: 'It is not only morally right, it is good business.'