Community aid groups in Philadelphia and commercial banks have joined forces to fund a new Black and Brown business owners loan program in the region, with the goal of lending $100 million over the next four years.
The Philadelphia Growth, Resilience, Independence, Perseverance Fund (GRIT) has so far secured loan commitments and financial grants of just over $13 million, according to Varsovia Fernandez, executive director of the newly formed Philadelphia Alliance for Financial Services Leadership, which organized the new fund. “It’s the first phase of a four-year program,” she said Tuesday.
The new fund was the brainchild of nearly 30 financial institutions, including the Philadelphia Federal Reserve, the Pennsylvania Network CDFI and the Urban Affairs Alliance, which have joined forces with the Greater Philadelphia Chamber of Commerce’s Recharge and Recovery Initiative to mitigate the impact of the pandemic. on small businesses.
The group turned into a coalition group and launched the fund.
“Despite efforts in the past year, the assistance provided to small businesses has not met their needs, particularly for minority businesses,” said Dan Betancourt, president of the Pennsylvania CDFI Network and executive director of Community First Fund.
“This effort is unique – we are not aware of gathering leaders of financial institutions on this scale.”
The money will first be disbursed through 11 Community Development Finance Institutions, known as CDFIs, which the federal government has used to distribute PPP and other emergency program funds since the start of the COVID-19 crisis.
CDFIs will receive the PHL GRIT Fund money first, then turn around and make loans. Reason?
“Many small businesses lack confidence in financial institutions,” Betancourt said. “We are helping them bridge into the financial mainstream over time. This confidence-building is important.”
Loans vary in size and term. “More flexible terms help small businesses better prepare,” said Sue Lonergan, director of mid-market and specialist commercial lending at Fulton Bank and group co-chair.
In order to provide these loans, CDFIs have to maintain a good balance sheet. Generally, banks do not support these organizations, so this is unique to this program,” Lonergan said. “Working together in this way to support CDFIs is a new paradigm for us that we hope will expand over time.”
So far, the efforts have attracted regional banks such as Client Bank, Univest and WSFS, minority depository institutions Asian Bank and United Bank of Philadelphia. Larger institutions, such as Bank of America, Citizens Bank, and PNC Bank, have made additional capital commitments.
CDFIs that distribute funds include Beech Capital, Neighborhood Progress Fund, Community First Fund, PIDC, Enterprise Capital, Reinvestment Fund, Entrepreneur Works, and Women’s Opportunity Resource Center.
– This is a developing story and it will be updated.