ImpactAlpha, May 11 — The Entrepreneurs of Color Loan Fund will buy loans off the books of community lenders to free up their capital for more lending to minority entrepreneurs. “The Loan Fund offers that missing liquidity,” said George Ashton of the Local Initiatives Support Corp. “While there is a secondary market for SBA loans, there is no similar option for many other types of loans.”
JPMorgan Chase committed $50 million, and was joined by Block (formerly Square), Amalgamated Bank, Costco, Forbright Bank and Rippleworks.
The softening economy, COVID and the war in Ukraine “means that funds such as the Entrepreneurs of Color Loan Fund are more important than ever to support historically marginalized communities and BIPOC entrepreneurs,” Rippleworks’ Doug Galen told ImpactAlpha.
Community recovery vehicles
An earlier effort to strengthen the balance sheets of community development financial institutions was developed by Calvert Impact Capital and Minneapolis-based Community Reinvestment Fund to help sustain underserved communities through the Covid pandemic.
Loan purchasing funds in New York, California, Washington state and 15 states across the southern U.S. supported an additional $210 million in loans to 3,500 businesses.
The Entrepreneurs of Color Loan Fund will purchase loans made by partner CDFIs, including Access to Capital for Entrepreneurs, Ascendus, BOC Capital Corp., Detroit Development Fund, Pursuit and TruFund Financial Services, as well as LISC.