ImpactAlpha, March 6 — Kansas City-based Kauffman Foundation is providing $5.3 million to DreamSpring, an Albuquerque-based national community development financial institution, or CDFI. The foundation’s grant allocation includes $5 million to create $140 million in microloans for more than 8,000 small businesses in the Kansas City area over the next five years.
DreamSpring will focus on lending to small business owners in Kansas City’s low-income and distressed census tracts. The Kansas City metro area has a competitive ecosystem of more than 50,000 small business owners, which rely primarily on loans from traditional banks. Such lenders have historically failed to reach businesses owned and led by Black, women and minority owners.
Census tracts in Kansas City with a larger share of white-owned businesses receive more loans compared to tracts with a higher-share of Black- or Latino-owned businesses, according to the Urban Institute.
DreamSpring will use the other $300,000 to help deploy the loans to borrowers. Kauffman made the investment via its Direct Capitalization Loan Fund, which aims to facilitate lending to small businesses in disinvested communities.
DreamSpring’s Anne Haines said the grant “will reduce the capacity gap and bring in leveraged capital to create jobs and have transformative impacts on entrepreneurs, their families, and entire communities within metropolitan Kansas City.”
Since its inception in 1994, DreamSpring has issued more than 46,000 loans totaling over $538 million to small businesses that have created roughly 80,000 jobs in underserved communities.