BofA Launches $10 Million Small Biz Grant Program
The Bank of America has rolled out a new $10 million grant program to help nonprofit lenders aid small and rural businesses.
Announced yesterday, the grants would be used to help community development financial institutions and other nonprofit lenders meet required reserve levels and thereby access millions of dollars in new low-cost capital, according to Bank of America.
The program involves leveraging funds from the SBA and the U.S. Department of Agriculture. To access the capital, nonprofit lenders participating in these federal loan programs must set aside loan loss reserves at levels of up to 15% of the capital provided by the agencies. However, due to the economic recession, most of these lenders have been unable to meet the reserve requirements, limiting their access to loan capital at a time when small businesses most need this support, the bank said.
The grants are available to 501(c)3 nonprofits enrolled in the SBA's 7(a) and micro loan programs as well as the USDA's upcoming micro loan program. Since credit unions are 501(c)1 and 501(c)14 nonprofits, they would not be eligible to apply for the grants.
"The new grant program is intended to give these financial intermediaries the ability to increase their lending capacity by drawing down on their SBA and USDA loan facilities," Jefferson George, a Bank of America spokesman, said. Bank of America said the grants may unlock as much as $100 million in low-cost, long-term capital for small business micro loans nationwide over the next 12 months. The bank said it has provided more than $1 billion in loans and investments to 120 CDFIs in 37 states.