Nonprofit lenders have another source to aid small and rural businesses through a new $10 million grant program from the Bank of America.
Announced July 29, 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.
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