At a time when the nation’s economy needs a serious jump-start, Bank of America has launched a new philanthropic initiative to provide just that. With a commitment of $10 million, the company will support micro lending programs for small businesses across the country that are desperately in need of cash. What’s more, though, is the ripple effect that initial $10 million will have. Instead of simply providing the money in loans directly to small businesses, the company is providing the funding to community development financial institutions and other nonprofit lenders for use as loan loss reserves—a move which opens up potentially ten times as much funding from the federal Small Business Administration and the U.S. Department of Agriculture over the next year.
The logistics may seem complicated for anyone not schooled in the ways of finance. In a nutshell, SBA and USDA microloans are made through local nonprofit lenders, which also provide business training and technical assistance to their small business borrowers. To access the capital, nonprofit lenders participating in these federal programs must set aside loan loss reserves at levels of up to 15 percent of the capital provided by the agencies. However, due to the recession, most of these lenders are unable to meet the reserve requirements, which limits their access to loan capital at a time when small businesses need it most.
Here’s where Bank of America's new microloan grants come in. The program was created specifically to help CDFIs and other nonprofit lenders meet the required reserve levels, and thereby access up to $100 million in new low-cost capital, which they then can lend out to struggling small business owners.
From a best-practices standpoint, the program hits many key goals of effective corporate giving. Some of these include:
For more information on Bank of America’s community investment initiatives, go to www.bankofamerica.com/community.
Sign-Up Now and Stay Informed!
Additional text goes here and here and here.
More text regarding the E-Alerts signup goes here.
©John Wiley & Sons, Professional and Trade Subscription Content
One Montgomery Street, Suite 1200, San Francisco, CA 94104-4594 | Phone: 888.378.2537 | Fax: 888.481.2665
Terms and Conditions