ImpactAlpha, December 6 – The Aspen Institute and the Microfinance Impact Collaborative launched the Entrepreneur Backed Assets Fund last year to enable community development financial institutions, or CDFIs, and other community lenders to boost their “microlending” capacity by selling some of the small loans on their books.
“We know that microloans are indispensable in meeting the credit needs of entrepreneurs of color and women entrepreneurs,” said Joyce Klein of Aspen Institute’s Business Ownership Initiative.
The fund has secured $11.5 million. Among the commitments: a $3.5 million grant from Wells Fargo, $1 million in grants and subordinated debt from the Colorado Health Foundation, $2 million in subordinated debt from the Annie E. Casey Foundation, and a $5 million line of credit from Truist Bank.
Western Alliance Bank, bank holding company HTLF and Byline Bank committed to purchase $6 million in loans from the fund by next year.
The fund expects to have sold loans to 10 banks by the end of the year. Of the loans sold to date, nearly three-quarters went to entrepreneurs of color, 44% to women and 78% to entrepreneurs in low-income communities.