Entrepreneur-backed Assets Fund Draws $17.5 Million in New Commitments

Posted December 15, 2021, By the Annie E. Casey Foundation

Man andA black man and a black woman stand in the doorway of a store. The woman is holding a white sign that says open. Both are smiling an wearing striped aprons.

The Aspen Insti­tute and the Micro­fi­nance Impact Col­lab­o­ra­tive have announced $11.5 mil­lion in new fund­ing and $6 mil­lion in pur­chase com­mit­ments for the Entre­pre­neur Backed Assets (EBA) Fund. A first of its kind ini­tia­tive, the fund aims to help com­mu­ni­ty-based finan­cial insti­tu­tions strength­en their capac­i­ty to lend to small busi­ness­es owned by peo­ple of col­or and peo­ple in low-income communities.

The Annie E. Casey Foun­da­tion — one of sev­er­al orga­ni­za­tions com­mit­ted to seed­ing the fund — will pro­vide a $2 mil­lion sub­or­di­nat­ed loan. Oth­er con­tribut­ing orga­ni­za­tions include: Wells Far­go ($3.5 mil­lion Open for Busi­ness grant); The Col­orado Health Foun­da­tion ($900,000 sub­or­di­nat­ed loan and $100,000 grant; Tru­ist Bank (a $5 mil­lion line of credit).

We rec­og­nize the impor­tance of sup­port­ing entre­pre­neurs of col­or and busi­ness­es in low-oppor­tu­ni­ty com­mu­ni­ties, and a proven approach to doing that is help­ing them obtain cap­i­tal,” said Tra­cy Kar­tye, direc­tor of social invest­ments at the Casey Foun­da­tion. The EBA Fund has already been suc­cess­ful at con­nect­ing busi­ness­es with the resources they need, and the Annie E. Casey Foun­da­tion is pleased to be able to contribute.”

Beyond these fund­ing com­mit­ments, mul­ti­ple banks have agreed to pur­chase microloans from EBA Fund via com­mu­ni­ty devel­op­ment finan­cial insti­tu­tions (CDFIs) through 2022. Par­tic­i­pants include: West­ern Alliance Bank (up to a $5 mil­lion com­mit­ment); HTLF through City­wide Banks and Min­neso­ta Bank and Trust (up to a $500,000 com­mit­ment), and Byline Bank (up to a $500,000 commitment).

By the end of 2021, EBA Fund will have onboard­ed 14 CDFI part­ners and com­plet­ed sales to 10 banks. Of the cur­rent loans pur­chased by the fund, 72% are to entre­pre­neurs of col­or, 44% to women entre­pre­neurs and 78% to entre­pre­neurs in low-income communities.

The fund began in 2020 with back­ing from the Citi Foun­da­tion. Its design emerged from the Micro­fi­nance Impact Col­lab­o­ra­tive, sup­port­ed by the Aspen Insti­tute, which aims to iden­ti­fy and imple­ment strate­gies to scale microlend­ing in the Unit­ed States.

Since launch­ing, EBA Fund has removed hur­dles that pre­vent the wide­spread sale of CDFI microloans and helped banks focus on max­i­miz­ing val­ue for their cus­tomers and com­mu­ni­ties while help­ing to address racial and gen­der wealth gaps.

Small busi­ness­es dri­ve the U.S. econ­o­my,” says Ryan Ammann, team lead for Tru­ist Com­mu­ni­ty Capital’s Funds and Alter­na­tive Invest­ments. Pro­vid­ing equi­table access to cap­i­tal to low-and-mod­er­ate income com­mu­ni­ties and minor­i­ty-owned small busi­ness­es can spark inno­va­tion, cre­ate sus­tain­able growth and dri­ve rein­vest­ment in neigh­bor­hoods across the Unit­ed States.”

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