It’s widely recognized that small businesses are drivers of economic growth and job creation. However, many small businesses—in particular minority- and woman-owned—are finding it challenging to access the capital they need due to a decrease in mainstream finance. Only 50 percent of small businesses who sought credit last year were approved, and minority-owned businesses were three times more likely to get turned down for a bank loan.
For high-sales banking firms, loan denial rates were twice as high for minority-owned businesses.
Opportunity Finance Network (OFN)—the national network of community business lenders—recently partnered with the Goldman Sachs 10,000 Small Businesses to increase small business capacity and lending in low-income communities in the U.S. Today, they’ve selected 24 small business lenders—community development financial institutions (CDFIs) and other mission-driven lenders—across the nation to participate in the Small Business Finance Collaborative.
Mark Pinsky
President and CEO
Opportunity Finance network
These lenders will learn how to strengthen lending strategies and will encourage sustainability, growth, and job creation in small businesses in underserved communities. Collectively, these lenders have over 7,500 small business loans outstanding, totaling nearly $600 million.
These 24 lenders will undergo an intensive two-year program of peer learning, training, and technical assistance delivered by OFN. Each lender participating will create and implement a strategic growth plan to improve lending strategies and practices, while maintaining asset quality. Participants will be expected to report regularly on growth goals and to adopt best practices.
Funding for the program is provided by Goldman Sachs 10,000 Small Businesses with additional support from Surdna Foundation.
“Our nation’s economic recovery has been very uneven, with minority- and women-led small businesses in underserved communities experiencing barriers to the credit they need to succeed,” said Mark Pinsky, president and CEO of OFN. “The participants in the Collaborative are uniquely positioned to reach these communities, helping owners avoid high cost loans. They will build strategies to aid small business and encourage sustainability, growth, and job creation.”
Lender participants in this Finance Collaborative reflect the diversity of mission-driven small business lenders and approaches. Some participants have a national presence, while others serve local communities. Working in urban, rural, and Native communities, these lenders offer a range of lending products and business models. Collectively, the 24 participants have cumulative assets exceeding $862 million with over 7,500 small business loans outstanding totaling nearly $600 million.
Esta Stecher
CEO
Goldman Sachs Bank USA
“Our partnership with OFN will continue to support mission-driven lenders, so that even more entrepreneurs gain access to the capital they need to succeed,” said Esta Stecher, CEO of Goldman Sachs Bank USA. “These lenders were chosen because of their expertise and leadership in this area. We look forward to seeing the impact they will have in underserved communities.”
Lenders participating in the 2015-2016 Small Business Finance Collaborative are: • Access to Capital for Entrepreneurs, Inc. (ACE) • Accion New Mexico ∙ Arizona ∙ Colorado ∙ Nevada • Bridgeway Capital • Brooklyn Cooperative Federal Credit Union • California Coastal Rural Development Corporation (Cal Coastal) • CDC Small Business Finance • CEI • Colorado Enterprise Fund (CEF) • Community First Fund • Community Reinvestment Fund, USA (CRF) • Craft3 • Entrepreneur Fund • Excelsior Growth Fund • Growth Capital • Kentucky Highlands Investment Corporation (KHIC) • LiftFund, formerly known as Accion Texas • Montana Community Development Corporation (Montana CDC) • Northern Initiatives • Pacific Community Ventures • PIDC Community Capital (PIDC-CC) • The Support Center • Travois • VEDC • Virginia Community Capital (VCC)
To learn more about the Opportunity Finance Network (OFN) and the 2015 Finance Collaborative program, visit www.ofn.org.
