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 Federal Reserve study, permanent small business closures were 30% higher than normal during the coronavirus, with underserved communities hit the hardest.
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 communitiesfootnote1—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:
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.