NEW YORK, May 10, 2022 /PRNewswire/ –The Local Initiatives Support Corporation (LISC) today announced the closing of $100 million for the Entrepreneurs of Color Loan Fund (Loan Fund), an impact investment lending fund that works with local Community Development Financial Institutions (CDFIs) to accelerate the flow of capital to minority-led businesses.
This series of commitments is led by $50 million in senior and subordinated debt capital from JPMorgan Chase. Last year, JPMorgan Chase selected LISC to lead the national expansion of the Entrepreneurs of Color Fund (EOCF) program, including the addition of this new mission-focused loan fund. Other early Loan Fund investors include Block (formerly Square, Inc.), Amalgamated Bank, Costco, Forbright Bank and Rippleworks.
“The EOCF program has shown how cities can be laboratories for innovation, where a pilot program, tested in a handful of cities over time, can be scaled up to support small businesses in communities across the country,” said Erin Robert, Head of Impact Finance at JPMorgan Chase. “With the addition of this new fund, JPMorgan Chase and other investors are able to pool resources to help advance racial equity and build a more inclusive economy.”
The EOCF program helps minority businesses grow through direct funding as well as access to consulting services and networking tools. It works with CDFIs serving targeted cities such as Atlanta, Chicago, DetroitDC Metro, Los Angeles, New York and the San Francisco Bay Area. To date, it has served 1,500 businesses.
The loan fund expands the capacity for impact. It buys stakes in previously issued loans to minority-owned businesses from designated CDFI partners to free up local capital for additional lending to entrepreneurs of color. Eligible transactions include micro loans, non-SBA small business loans, and commercial real estate loans with average amounts ranging from $10,000–$550,000.
“The Loan Fund represents an innovative model for the capital delivery system,” said George Ashton, president of LISC Fund Management, LLC, which oversees the fund. “Although there is a secondary market for SBA loans, there is no similar option for many other types of loans. The Loan Fund provides this missing liquidity, with a particular focus on loans to entrepreneurs from color and the goal of increasing access to capital for these companies.”
“The Entrepreneurs of Color Lending Fund provides liquidity to CDFIs who are on the front lines in communities of color and understand the barriers that entrepreneurs of color have historically faced. Amalgamated Bank appreciates partnering with institutions such as LISC, JPMorgan Chase and others committed to racial equity and prioritizing solutions that close the racial wealth gap,” said Priscilla Sims BrownPresident and Chief Executive Officer of the Merged Bank.
The purpose of the Loan Fund is to help break down the systemic barriers that have historically limited the growth of minority businesses. Black- and Hispanic-owned businesses have been underrepresented among businesses growing with external financing (financing through household savings, social media, or bank financing). This suggests that Black- and Hispanic-owned businesses have fewer opportunities to build businesses with scale-based competitive advantage.
“We are thrilled to partner with LISC, JPMorgan Chase and the other investors in the Entrepreneurs of Color Lending Fund to promote entrepreneurship and contribute to greater access and equity in financing for small businesses. LISC’s mission with EOCLF is well aligned with Forbright’s focus on sustainability and we look forward to seeing the impact of this important initiative on small businesses and underrepresented communities,” said Sonia Khannamanaging director of sustainable finance at Forbright Bank.
“The future of our collective social and economic well-being depends on addressing systemic racism and closing the growing wealth gap in our country,” notes Doug Galen, co-founder and CEO of Rippleworks. “By accelerating the flow of capital to minority entrepreneurs, the EOCLF gives financial institutions the opportunity to play an active role in removing the barriers that have contributed to significant economic inequality in the United States”
Loan Fund partner CDFIs include: Access to Capital for Entrepreneurs (ACE), Ascendus, BOC Capital Corp., Detroit Development Fund, LISC, Pursuit and TruFund Financial Services, Inc.
“The Loan Fund provides innovative solutions that will create access to affordable capital for minority-owned business owners,” said James H. BasonPresident and CEO of TruFund Financial Services, Inc. “We believe that access to capital is critical to growing resilient small businesses and sustaining vibrant communities. This partnership takes us from the power of a single the power of collaboration to foster inclusive economies and help close the racial wealth gap.”
The EOCF program was piloted in Detroit in 2015 by JPMorgan Chase, the WK Kellogg Foundation and the Detroit Development Fund. It has since attracted a range of investors and partners to provide approximately $75 million in direct financing and advisory services to 1,500 businesses, including companies like The Lip Bar in Detroit and Nappy Head Club at New York.
The new loan fund complements these grants, loans and services with an additional funding stream. It is part of the LISC $1 billion Project 10X’s commitment to narrowing racial gaps in wealth and health opportunity across the country, as well as JPMorgan Chase’s $30 billion racial equity pledge.
For general information about the EOCF program, visit https://www.lisc.org/eocf/.
For more details on the Entrepreneurs of Color Lending Fund, visit https://www.liscstrategicinvestments.org/EOCLF.
About LISC
LISC is one of the nation’s largest community development organizations, helping to forge vibrant, resilient communities across America. We work with residents and partners to close systemic gaps in health, wealth and opportunity and advance racial equity so people and places can thrive. Since our creation in 1979, LISC has invested $26.7 billion to create more than 463,000 affordable homes and apartments, develop 78.5 million square feet of commercial, community and educational space, and help tens of thousands of people find jobs and improve their finances. To learn more, visit www.lisc.org.
About JPMorgan Chase
JPMorgan Chase & Co. (NYSE: JPM) is a leading financial services company based in The United States of America (“US”), with operations worldwide. JPMorgan Chase had $3.7 trillion in assets and $294.1 billion in equity at December 31, 2021. The company is a leader in investment banking, personal and small business financial services, commercial banking, financial transaction processing and asset management. Under the JP Morgan and Chase brands, the company serves millions of
customers in the United States and many of the world’s largest corporate, institutional and government customers. Information about JPMorgan Chase & Co. is available at www.jpmorganchase.com
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SOURCE Local Initiatives Support Society (LISC)
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