A Local Answer to Rebuilding Small Business

Community Development Financial Institutions (CDFIs) offer support to underserved neighborhoods hit by the coronavirus

Small businesses are linchpins in their communities: creating 1.5 million jobs annually, responding to community needs and boosting the local economy.

Many of the more than 30 million small businesses across the United States now face serious challenges as they work to recover from the ongoing impacts of the coronavirus. According to a recent survey of nearly 6,000 small businesses, 25% may be in danger of closing permanently. In underserved communities, the rates are much higher—41% of Black-owned and 32% of Hispanic-owned businesses have shuttered since stay-at-home orders were put in place.

Small businesses need funding to help keep their employees, pay their bills and, in many cases, keep the lights on. Community Development Financial Institutions (CDFIs)—which are typically nonprofit loan funds serving low- and moderate-income communities[1]—can help by offering business owners both capital and technical assistance.  CDFIs can mobilize philanthropic support for small businesses affected by the coronavirus and, in addition to making loans, they offer education services, business development resources and professional mentoring, making them a critical resource in efforts to promote economic mobility.

Bank of America is the largest private investor in CDFIs in the United States, with more than $1.6 billion in loans and investments in over 250 CDFIs. In response to increased need for small business support, the bank committed $250 million in new capital to CDFIs to provide them with the liquidity needed to make Paycheck Protection Program (PPP) loans to their clients. To date, Bank of America has exceeded the commitment, closing more than $250 million in deposits and credit facilities for CDFIs as well as Minority Depository Institutions (MDIs), and $10 million in philanthropic grants to help fund CDFI operations.  Bank of America has also been reported by the Small Business Administration to be the largest PPP provider in the U.S. by number of approved loans, distributing $25 billion in loans to more than 334,000 clients, 99% of which has gone to businesses with less than 100 employees.

Here, three examples of businesses working with Bank of America’s CDFI partners demonstrate how, through the PPP  program, they’ve been able to keep their doors open, continue to provide employment, and serve their local communities during the coronavirus:

Urban Collaborative Project, San Diego, CA

California’s stay-at-home order created a double dilemma for the Urban Collaborative Project (UCP), a nonprofit providing a range of support for its San Diego community. Clients were more acutely in need of resources to cope with lost incomes, and its own resources were also in jeopardy. “Families rely on us, and if we can’t provide for them, then they families are forced to go without many important basic needs and services,” says Brian Pollard, UCP’s Founder and Executive Director.

UCP received an SBA Paycheck Protection Program (PPP) loan from CDFI partner Community Reinvestment Fund, USA (CRF), and immediately used it to pay its staff and specialists, and to continue serving the community without interruption. “We knew we couldn’t fail. Our loan was more than a relief to our organization,” says Pollard. “It was a relief for every single family we serve.”

Schexnayder’s Supermarket, Vacherie, LA

Founded in 2007, Schexnayder’s is the only grocery store in Vacherie, Louisiana, providing access to fresh produce and other foods for the town’s 6,000 residents and a cluster of neighboring small communities. His situation was strained by the fallout caused by the coronavirus, and owner Ricky Reulet need a way to incentivize his employees to continue to come to work, to help cover some of their financial burdens including transportation and childcare. With this help of HOPE Credit Union, Reulet was able to secure a PPP loan that allowed him to keep his 25 employees on the job. “Our goal has always been staying connected to those within our community,” says Reulet. “That hasn’t changed.”

Scottdale Early Learning Center, Decatur, GA

Since 1977, Scottdale Early Learning Center (SEC) has offered child-care and education services in DeKalb County, home to nearly 50,000 minority-owned small businesses[2]. As Georgians complied with shelter-at-home orders, SEC recognized that many families’ incomes and resources would be affected—and that the SEC’s support and services were needed more than ever. Working with Reinvestment Fund, a national CDFI, the learning center was able to secure a PPP loan that allowed them to continue to offer virtual learning programs for the families it serves, while covering the salaries of its staff. 

Learn more about the bank's $100 million commitment to help local communities and how the bank is working alongside CDFI's to support small businesses across the United States.

  1. https://cdfi.org/wp-content/uploads/2019/03/2019-CDFI-Report-Complete-FINAL.pdf
  2. https://www.census.gov/quickfacts/fact/table/dekalbcountygeorgia/SBO030212#SBO030212

08/19/20


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