ImpactAlpha, March 16 – MCE Social Capital, a San Francisco-based nonprofit impact investing firm, uses a loan guarantee model that leverages the credit of high net worth individuals and foundations to unlock capital for small and growing businesses (SGB) – the so-called “missing middle” – in rural Africa and other underserved areas.
Guarantors don’t put up capital up-front; in the case of a default, they share the cost of the default pro rata via tax-deductible contributions to MCE. The guarantees enable MCE to access financing from banks, development finance institutions and impact investors to make loans.
MCE will use the grant, from Deutsche Bank Microcredit Development Fund, to increase its loans from $5.5 million today to over $12 million by the end of 2021.
“MCE will be able to expand our SGB portfolio much faster than we could otherwise,” said MCE’s Gary Ford in announcing the grant. The portfolio includes companies such as Sol Organica in Nicaragua, a certified B-Corporation that works to improve the livelihoods of tropical fruit farmers in the country and promote sustainable agriculture.