LISC supported a range of small business CDFIs during the pandemic to help them deploy capital locally to entrepreneurs. This summer, we had a chance to check in with two of them to learn more about their impact.
Small businesses needed capital during the pandemic—and they needed it fast.
LISC intervened in multiple ways with grants and flexible financing--including $2.6 million in loans to locally positioned small business CDFIs in 2020 and 2021, with support from a Wells Fargo Open for Business grant. It meant LISC could help fuel microloans that were vital to the survival and long-term stability of businesses.
We had a chance to check in with two of the CDFIs—Access to Capital for Entrepreneurs (ACE), in Atlanta, and Inclusive Action for the City (IAC), in Los Angeles—to learn how it has been deployed to date.
ACE has been using its $800,000 LISC loan for general lending efforts and to retire higher-interest debt, freeing up capital to support more small businesses, with a particular emphasis on minority- and women-owned businesses. To date, ACE has deployed 12 small business loans totaling more than $1 million.
One of those borrowers is Cycle Gang, LLC, a fitness studio offering cycling, aerobics, and cardio classes in College Park, GA. When the pandemic hit in 2020, owner Khalil Aziz had to drastically reduce class sizes and handle a steep decrease in membership. A microloan from ACE helped stabilize the business, and Aziz is in conversations for a second loan to purchase the building where he currently rents.
In Los Angeles, LISC closed a $250,000 loan to IAC, which has long been focused on urban policy and economic development initiatives, including support for entrepreneurs. IAC’s current portfolio is 98 percent businesses of color.
The loan enhanced IAC’s capacity to underwrite loans to minority-led small businesses through its micro-loan program, the Semi’a Fund. With the additional financing, IAC was able to deploy $270,500 in low-interest loans to 27 microbusinesses, helping owners buy equipment for outdoor hair salons, secure new vendors to sidestep supply chain issues, and access working capital.
“This loan came at a critical time when entrepreneurs were trying to find ways to pivot their businesses and generate revenue amidst COVID-related business closures,” said Maribel Garcia, IAC’s director of lending.
IAC provides intensive support and technical assistance to its small business clients, especially those with high-interest debt. The IAC model focuses on deploying much smaller loans – this set averaged at just $10,000—to support businesses that often have the hardest time accessing capital. You can hear some of their business’ stories here.
“I am proud of LISC’s investments in small business CDFIs across the country, which enable us to reach a wider range of diverse small business owners,” said Jessica Hanmer, LISC Economic Development Lending program manager. “CDFI loans help us, and our partners, play to our strengths and build capacity to better support small business owners across the country.”