ImpactAlpha, July 20 – More than 90% of Black-owned businesses in the U.S. are sole proprietorships that lack access to “friends and family” funding or other sources of capital. Asheville, N.C.-based Community Equity Fund is designed to help businesses qualify for loans from community development financial institutions, or CDFIs.
The fund’s early pipeline includes two co-working spaces, Spillway Bridge and GrindAvl, and a commercial landscaping business, Mclean Landscaping.
The evergreen fund, which has raised $1 million, is the brainchild of SOCAP co-founder Kevin Jones and Stephanie Swepson Twitty, who leads the nonprofit Eagle Market Streets Community Development Corp. It’s backed by a $700,000 donation from Buncombe County, where Asheville is based, and other donors.
Community Equity Fund will cut checks of up to $75,000 to sole proprietors that have been in business for three to five years and have annual revenues of up to $100,000. Investments will be repaid through a 7% revenue-share agreement, and then reinvested into new businesses.
Jones said the $300,000 management fee on the $1 million fund is expected to decline to a more typical 10% once the fund reaches $10 million.