From Opportunity Finance Network.
In early December, The Aspen Institute and the Microfinance Impact Collaborative announced the creation of the Entrepreneur Backed Assets (EBA) Fund, which will strengthen the capacity of community-based financial institutions to lend to small businesses in low-income communities and those owned by people of color.
The fund, which will create a secondary market for loans originated by community-based microlenders, has been launched with initial grant funding from the Citi Foundation, the Bill & Melinda Gates Foundation, and the Robert Wood Johnson Foundation. Microsoft Corporation and Woodforest National Bank are making the first capital investments in the Fund. A total of $8.75 million in founding commitments have been made to this innovative solution.
The six OFN member microlenders that comprise the Microfinance Impact Collaborative – Accion Serving Illinois and Indiana, Ascendus, Dreamspring, Justine PETERSEN, LiftFund and Accion Opportunity Fund – make 75 percent of their loans to business owners of color, and 61 percent to businesses owned by low- and moderate-income individuals. EBA Fund will empower these crucial institutions by purchasing existing loans, providing capital for new lending.
“We know that community development financial institutions (CDFIs), and microlenders in particular are critical to getting capital to entrepreneurs of color. The challenges these lenders have historically faced in raising the right kinds of capital have only been exacerbated by the impact of the COVID pandemic. We spent two years designing the EBA Fund business model, so we were able move rapidly to launch and respond to the unique challenges of the pandemic,” said Joyce Klein, director of the Aspen Institute’s Business Ownership Initiative and chair of the EBA Fund board of directors.