New Loan Provides Capital for Small Business Lending Program in Low-Income Communities

We are delighted to announce a new Program-Related Investment in Community Reinvestment Fund, USA (CRF). CRF’s work is closely aligned with our goals to invest in expanding access to the opportunities that allow families in the Bay Area to advance and thrive. Founded in 1988, Community Reinvestment Fund, USA invests capital in communities through small business loans, housing loans and community facility loans. Over the next two years, they aim to make $17 million in small business loans to Bay Area businesses without access to conventional sources of credit.

Our $500,000 PRI loan, repayable over seven years, will increase CRF’s capacity to lend to small businesses—helping these businesses grow and create or retain jobs in economically distressed areas like Richmond, San Carlos and other Bay Area cities and neighborhoods.

Here are two small business borrower stories:

Preserving Local Jobs and Culture, Richmond, CA

This Richmond-based Mexican restaurant opened 60 years ago and has been a much-loved place for locals to enjoy great food since then. The original owners decided to retire, and it seemed that this local gem would close unless new owners were found. A local businesswoman decided to purchase the restaurant and keep it open – realizing the need to preserve this staple in the community. In May of 2014 CRF closed a loan with her for $300,000. The loan enabled the business to save three jobs as well as create five additional living wage jobs in the low-income community, helping ensure the historic past of this restaurant lasts long into the future.

Growing Local Living-Wage Jobs, San Carlos, CA

A catering business, founded in 1978, had grown steadily but needed additional capital to refinance some existing debt. In April of 2015, CRF closed on a $1,300,000 loan to refinance that debt and provide additional working capital. The loan helps the business retain 87 jobs, 75 of which are held by Hispanic/Latina workers and one is held by an African-American worker. The business will also create 30 more positions to handle the increased demand. All of these jobs earn a living wage and have access to health insurance.

PRI story-Community Reinvestment Fund March 2016

Photo courtesy of CRF, USA

The small business loan products CRF offers focus on hard-to-fund loans that traditional lenders cannot provide. They also require that each loan meet various Community Impact Criteria, including: job creation or retention, particularly of living wage jobs; serving disadvantaged populations as business owners; serving non-profit businesses; and community revitalization or stabilization to an economically-distressed area. Sixty-six percent of CRF’s lending volume has been provided to businesses located in low-income communities.

CRF is one of only 14 non-bank Small Business Administration lenders in the U.S. SBA loans provide small businesses with flexible financing, filling a gap in the marketplace for small business credit with loans that are too large for many CDFIs to finance, but too small for commercial banks to justify the time it takes to underwrite these loans. Banks are often unwilling to make loans to businesses with challenges such as prior-year losses, insufficient collateral and lower credit scores. Small business borrowers are able to use SBA financing to acquire real estate and/or equipment, working capital, capital improvements, purchase of other business, and debt refinancing. By offering longer terms and lower down payments, CRF helps businesses conserve working capital. In partnership with our donors, we are proud to support CRF with this loan.