A new loan fund, managed by LISC affiliate New Market Support Company, will provide long-term funds to CDFIs to in turn expand their lending to small businesses in underserved communities—with the goal of narrowing the racial wealth gap that plagues Black entrepreneurs.
The Fund Will Increase the Pipeline of Funding for Black-owned Small Businesses
The Expanding Black Business Credit network (EBBC) officially announced today the final close of its Black Vision Fund. The fund will lend long-term funds to six successful Community Development Financial Institutions (CDFIs) with long histories of inclusive investing in order to expand their lending activity to small businesses in underserved communities. A primary goal is to reduce the racial wealth gap that plagues the Black community.
"The Black Vision Fund is the result of a network of Black-led/focused loan fund CEOs collaborating to create a fund that will demonstrate that there is a large market opportunity that has been neglected, which is the growing number of successful Black-owned small businesses in the country," says Gary Cunningham, President and CEO of Prosperity Now. Black Vision Fund’s CDFI network servicing a variety of markets across the country includes MEDA, Community First Fund, City First Broadway Bank, Black Business Investment Fund, Hope Enterprise Corporation/Credit Union, and National Community Investment Fund.
EBBC members are experienced Community Development Financial Institutions with more than $1.5 billion in combined total assets who currently help support entrepreneurs and small businesses in Pennsylvania, Maryland, District of Columbia, Minnesota, Florida, Georgia, Tennessee, Alabama, Mississippi, Louisiana, Arkansas, Texas and California.
The fund will be managed by LISC New Markets Support Company (NMSC), an affiliate of Local Initiatives Support Corporation, and benefits from an anchor contribution from EBBC made possible by a significant grant from Wells Fargo. Additional funding partners include Amalgamated Bank, Ceniarth, David and Lucile Packard Foundation, Jewish Community Federation and Endowment Fund, Local Initiatives Support Corporation (LISC), and Opportunity Finance Network (OFN). All of these funders have contributed long-term, low-interest loan capital to the Black Vision Fund which will be on-lent to participating CDFIs. The CDFIs, in turn, will provide financing to eligible small businesses operating in or benefiting disadvantaged communities, including Black-owned small businesses.
According to the U.S Federal Reserve, while Black-owned businesses were more likely to apply for bank financing, less than 47% of their applications were fully funded. The data found that Black-owned businesses were two times as likely to be turned down for loans as white business owners. Building on EBBC’s commitment to create thriving business ecosystems that strengthen Black-owned small businesses, Black-led nonprofits, and the Black-focused/led CDFIs that help them to succeed, the Black Vision Fund invests in CDFIs serving as a lending intermediary between funders and disadvantaged small businesses throughout the country.
“Black-led and Black-focused financial institutions locate and invest in Black communities at much higher rates than white-owned financial institutions,” says Bill Bynum, CEO of Hope Credit Union in Jackson, Mississippi. “The CDFIs supported by the Black Vision Fund will provide vital capital that will accelerate the growth of Black-owned small businesses.”
Greater investment in Black-led or Black-focused financial institutions and businesses would have an historic impact on the racial wealth gap and expanding access to credit for Black business owners. Financing Black businesses increases the net worth of families of owners, creates local jobs, provides needed local goods and services, and ultimately contributes to supporting economic growth in Black communities.
To learn more about EBBC and Black Vision Fund, please visit ebbcfund.org.
About EBBC
Expanding Black Business Credit (EBBC) was formed in 2016 as a CEO Peer Learning Network by leaders of Black-led/focused Community Development Financial Institutions (CDFIs) to share best practices in lending to Black businesses and prove that there is an attractive market of Black-owned businesses that can be financed by the financial services industry and thereby reduce persistent inequalities of wealth, income and opportunity in Black communities.
They created a report to prove the value of equalizing lending to Black-owned small businesses and developed the Black Vision Fund to execute on it.
About Black Vision Fund
The Black Vision Fund (BVF) approves and invests loans in EBBC member Community Development Financial Institutions (CDFIs) that will then provide financing specifically to Black-owned small businesses. It is a vehicle that helps corporate and philanthropic investors put their capital to work to address racial and socio-economic disparities, fueling CDFIs with long histories of inclusive investing and deep connections to the communities they serve.