BIPOC Small Business Lending

Close the capital gap for Black, Asian, Latino and other entrepreneurs of color in Greater Boston.

Small businesses are crucial to our local economy: they employ local workers, offer products and services that meet community needs, and keep dollars local to build community wealth. Entrepreneurship can be a powerful mechanism to close the racial wealth gap–for example, the median net worth for Black business owners is 12 times higher than Black nonbusiness owners. Yet, business owners of color often lack full access to the technical assistance, networks, and most importantly, capital needed to scale.

While the number of minority-owned businesses has been rising, white residents are still 2.5 times more likely to own a business in Massachusetts. Unmet demand for capital among entrepreneurs of color is estimated to be at least $574 million in Massachusetts. The undercapitalization of these firms makes them smaller and less profitable, and more likely to struggle and fail. Ensuring that all entrepreneurs have equitable access to capital to support their businesses also helps to propel broader economic growth, generate new jobs and drive innovation statewide.

What You’ll Support: Organizations innovating with new financial products to meet the unique needs of BIPOC businesses in Greater Boston (e.g., line of credit, receivables financing, micro-equity), lending to wealth-building worker-owned cooperatives, and expanding their reach to businesses in historically disinvested communities.

Ascendus

What will my DAF funds support?

Lending in Greater Boston to small businesses and entrepreneurs, with a focus on lending to women, Latinx, and Black entrepreneurs. Funds will support Ascendus in innovating with new products (e.g. line of credit product, product for those recovering from damaged credit) and expanding lending to individuals or in sectors that are traditionally deemed as higher risk (e.g. seasonal businesses, food sector, etc.)

  • Ascendus is a national, non-profit Community Development Financial Institution (CDFI) that seeks to provide low-to-moderate income (LMI) business owners with access to capital and financial education. They seek to serve three main demographic groups: women, Latinx, and Black entrepreneurs.

  • Ascendus considers financial inclusion to be its guiding star and seeks to provide improved financial health and upward mobility to all. Over the course of its 30-year lifespan, Ascendus has refined its lending strategies to directly fight against income and wealth inequalities, especially among women, Latinx, and Black entrepreneurs. This has included intentionally working in ZIP codes and focusing on sectors (home-based childcare, restaurants, and ridesharing) that have a disproportionate share of these demographic groups. Based on research and documented capital gaps for these entrepreneurs, Ascendus has also rolled out new products in recent years (e.g., a line of credit) to better respond to the needs of its target population.

    • 85% of borrowers are entrepreneurs of color

    • 91% of loans to low- to- moderate income households

    • 36% of loans to immigrants

    • 100 jobs created and 170 jobs maintained in Greater Boston in 2022

    • 100% on-time payment track record to its investors

    • TD Bank

    • Citizens Bank

    • JP Morgan Chase

    • Restaurant Workers Community Foundation

    • US Economic Development Administration

Ascendus In Action | Jamaica Mi Hungry (Boston, MA)

Ernie has a passion for food and cooking. When he moved to Boston, he noticed a lack of Jamaican food and a lack of young Black men and women working in the Seaport area. Through an Ascendus loan in 2015, Ernie opened his Jamaican food truck. That food truck has now grown to two restaurants. When the pandemic hit, Ernie reached out to Ascendus again and was able to secure another loan that kept his businesses running, and his employees paid. Today, Ernie is opening a third location. Ernie currently has four employees, all of whom are Black or African American.

Local Enterprise Assistance Fund (LEAF)

What will my DAF funds support?

LEAF’s lending program in Greater Boston, Elevate Small Business, includes a focus on lending to small, minority- and women-owned businesses, worker cooperatives, and companies that provide healthy foods to people living in low- and moderate-income communities. Funds will allow LEAF to better support businesses with higher perceived risk while staying within LEAF’s typical risk tolerance.

  • Local Enterprise Assistance Fund (LEAF) is a Boston-based non-profit Community Development Financial Institution (CDFI) with a focus on community-owned natural food cooperatives, low-income cooperative housing developments, community land trusts, and worker-owned firms and other community-based enterprises.

  • LEAF’s focus on worker-owned cooperatives directly supports community wealth building and elevates underrepresented voices. Worker-owned cooperatives are values-driven businesses that are owned and self-managed by its workers, which allow for high-quality jobs and community wealth building. Approximately half of LEAF’s lending activity has been to minority-owned enterprises in the last several years (50% in 2020 and 42% in 2021). Additionally, LEAF has a diverse management team, with its senior leadership team made up entirely of individuals of color and nearly half of its board representing people of color.

    • Made 41 loans in 2020-21, of which:

      • 49% were to women-owned businesses

      • 46% were to minority-owned businesses

      • 68% were to businesses serving a low-to-moderate income population

    • Provided technical assistance to 182 businesses in 2020-21, of which:

      • 80% were to minority-owned businesses

      • 55% were to women-owned businesses

      • 65% were to a low-to-moderate income business owner

    • 100% on-time payment track record to its investors

    • Santander Bank

    • Cooperative Foundation

    • Wells Fargo

    • CDFI Fund

    • Massachusetts Growth Capital Corp.

    • Department of Agriculture

LEAF In Action | Comfort Kitchen (Dorchester, MA)

Comfort Kitchen is a restaurant collaboration between Biplaw Rai, Nyacko Pearl Perry, and Kwasi Kwaa chefs, community organizers, and data analysts from Dorchester. Through the City of Boston’s Main Street program, the team came to LEAF through its Elevate Small Business program to get a deeper understanding of their financial projections, a cost analysis of the project, and access to capital. LEAF’s team provided those services and helped them raise $810,000 from external debt and equity sources and $150,000 of LEAF’s own funds.

Because of the COVID-19 pandemic, the Comfort Kitchen team decided to host temporary pop-up events at various established venues in the Boston area. Elevate Small Business worked closely with the team to hone its business plan and financial model and helped them secure a subordinated loan from the City of Boston, financing from two other nonprofit loan funds alongside LEAF. Funding was used to support Comfort Kitchen’s final buildout and startup costs, including leasehold improvements, equipment & fixtures, and startup working capital.

Mill Cities Community Investments (MCCI)

What will my DAF funds support?

Funds will support debt and equity investments into BIPOC businesses, provide catalytic loan loss reserve capital and support Business Equity Ecosystem operations. Investments deepen the impact of the Business Equity Ecosystem, a collaborative founded by the Boston Foundation that holistically addresses the many barriers to resources by providing the capacity (The Business Equity Initiative), connections, capital and contracts necessary to grow Black- and Latinx-owned businesses.

  • Mill Cities Community Investments (MCCI) is a small Lawrence, MA-based nonprofit CDFI that strives to break down economic and racial inequality by growing the assets and wealth of historically disinvested individuals and their communities. MCCI seeks to accomplish this mission by providing capital and technical assistance to BIPOC business owners and homeowners in low-income, immigrant and historically disinvested communities.

  • In line with its mission to grow the assets and wealth of historically disinvested individuals and their communities in the Merrimack Valley and across Massachusetts, MCCI’s priority populations are low-wage earners, BIPOC and women business owners in census tracts below 80% of the area median income threshold. MCCI is one of two Black-led CDFIs in Massachusetts and prioritizes creating an organization-wide team with diverse lived experiences, diverse cultural backgrounds, and cultural competencies. 83% of its commercial borrowers are BIPOC-owned businesses.

    • $7M+ in flexible financing deployed by MCCI and ecosystem partners historically

    • 83% small business loans to BIPOC-owned businesses

    • Over 100 commercial loans in the past 7 years, 83% of which are to BIPOC-owned businesses (avg. loan size of $82k)

    • 300+ businesses supported through technical assistance in the past 2 years at MCCI

    • 100% on-time payment track record to its investors

    • Balance sheet has grown 3x in the past two years

    • Berkshire Bank

    • Eastern Bank

    • Enterprise Bank

    • Federal Home Loan Bank of Boston

    • Reading Cooperative Bank

MCCI In Action | City Sealcoating (Lawrence, MA)

Keith Cheney purchased City Sealcoating in May 2017 and, under his leadership, the business has grown four-fold. In 2020, City Sealcoating participated in the Foundation for Business Equity’s Business Equity Initiative (BEI) (now a program of MCCI) and was assigned a BEI Strategic Advisor to support Keith directly in a high-touch strategic advisory role over the course of nearly 9 months (200+ hours of support). Together, Keith and his BEI Advisor created a strategic growth plan to further expand the business which identified a new need for additional capital. In 2021, City Sealcoating received a MCCI loan of $275,000 to purchase two new trucks with plows, invest in marketing and a new website, and to hire an estimator. With the estimator position in place, City Sealcoating was able to deliver more accurate quotes, saving the company money and enabling Keith’s team to respond to customers in a shorter time span, which ultimately fueled greater customer retention.

In reflecting on his participation in BEI, Keith noted, “BEI has been integral in our growth. It flattened the learning curve especially for me as a new business owner.”

Massachusetts Housing Investment Corporation (MHIC)

What will my DAF funds support?

Support MHIC’s Minority Contractor (MBE) Financing program in Greater Boston, which provides receivables financing (also known as factoring) to help MBE subcontractors and contractors bridge payment delays by converting invoices into cash within a few days. 

Funds will also support lending to other BIPOC/minority-owned small businesses in Greater Boston via factoring, working capital loans, loans for the purchase of real estate and equipment, and receivables financing.

  • MHIC is a MA-based CDFI that provides innovative financing for affordable housing and community development throughout New England by lending to affordable housing developers and small businesses and facilitating investments into community development via tax credits.

  • MHIC’s theory of change directly speaks to systemic and structural economic and racial disparities. In addition to a dedicated focus on financing minority-owned businesses and emerging developers of color, MHIC has a dedicated Director of Racial Equity and Community Engagement and includes specific racial equity and inclusion goals in annual business planning. It is one of two Black-led CDFIs in Massachusetts and has a highly diverse staff (46% of staff and 57% of management are people of color). MHIC has also worked to push for practices that support greater racial equity and inclusion within the larger affordable housing and community development industry, including for example, building and maintaining a database of MBE contractors and vendors to which it can disseminate bid notifications.

    • To date, MHIC has raised over $3.6 billion from over 175 investors to support community development financing.

    • Directed $13.5M to expedite pay to MBE subcontractors in 2021

    • Directed $116M in contract value to MBEs in MHIC-financed developments in 2021

    • Since 2001, MHIC has provided $905M in New Markets Tax Credit program loans investing in low-income communities

  • 100% on-time payment track record to its investors

    • Bank of America

    • State Street

    • Freddie Mac

    • US Bank

    • Brookline Bank

    • Kresge Foundation

    • TBF

MHIC In Action | Wash Cycle Laundry (Chelsea, MA)

Wash Cycle Laundry (WCL) is a social enterprise that puts people with high barriers to employment on a path to economic mobility. MHIC combined New Markets Tax Credits with a low-interest permanent loan to finance its 10,000-square-foot laundry plant. Since WCL services the travel industry, revenues dropped 96% during the pandemic. Solutions-oriented working sessions with MHIC helped the Wash Cycle Laundry recover while safeguarding MHIC’s loan. 

As sales recovered, liquidity remained perilously low, and WCL could not yet qualify for working capital financing. The use of MHIC’s factoring program transformed the business, alleviating the need to chase down accounts receivables and create workarounds for cash shortages and freeing the managers to focus on managing the business. Founder and CEO Gabriel Mandujano credits MHIC for being integral to WCL’s growth and success, noting how MHIC goes “ beyond what is comfortable or typical for other financial institutions…I can unequivocally state that whereas others offer ‘programs,’ MHIC works to find solutions. We owe our Boston operation and the 80+ jobs it has created to their approach.”

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