Inversiones: A Small Business Investment Initiative

Commitment to Action

Inversiones: A Small Business Investment Initiative

Commitment by

National Association for Latino Community Asset Builders

In 2012, The National Association for Latino Community Asset Builders (NALCAB) committed to support the creation and expansion of 1,500 small businesses in predominately Latino communities, catalyzing the creation of 4,000 jobs. This commitment, in partnership with the Valley Economic Development Center, Acción Texas, Inc., Chicanos Por La Causa, and a national network of non-profits, will expand the availability of culturally and linguistically relevant services that open access to markets, strengthen competitiveness, and increase the flow of small business lending. Over a three year period, the commitment will provide small business development services to 5,000 owners and entrepreneurs, complete $50 million in small business lending, and secure $15 million in financing for economic development projects.

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Tabs

Overview

Summary

Commitment

Inversiones: A Small Business Investment Initiative

Launched

2012

Est. Duration

3 Years

Estimated Total Value

$135,677,775

Region

Northern America

Countries

United States

Commitment by

National Association for Latino Community Asset Builders

Partner(s) of the Commitment Maker(s)

Hacienda CDC, Mission Economic Development Agency, Chicanos Por La Causa, Inc., Latino Economic Development Corporation, Latino Economic and Development Center (LEAD), The Resurrection Project, Conexión Americas, Valley Economic Development Center (VEDC)

Details

APPROACH:
The National Association for Latino Community Asset Builders, Valley Economic Development Center, Acción Texas, Inc., Chicanos Por La Causa and a national network of non-profits that provide small business lending and development services, collectively commit to catalyzing the creation of 4,000 jobs by supporting the creation and/or expansion of 1,500 small businesses in predominately Latino communities over the next three years (2013 - 2016). The NALCAB network will achieve this by:
A.) Providing culturally and linguistically relevant small business development services to 5,000 owners and entrepreneurs;
B.) Complete $50 million in small business lending (loans above $50,000);
C.) Securing $15 million in financing for economic development projects in small business districts.
In order to achieve this significant new investment in Latino small businesses and neighborhood-based commercial centers, it is necessary to build the capacity and reach of non-profit developers, small business lenders (loans over $50,000) and technical assistance providers. NALCAB will facilitate peer-to-peer engagement among non-profit partners to leverage resources and achieve outcomes beyond what is possible for any individual organization. NALCAB will achieve its goals through the following activities;
-Make $1.5 million in grants to local non-profits to support the expansion of small business development services and small business lending capacity, through nationally competitive Requests for Proposals processes;
-Leverage and deploy $65 million from both private and public sources for small business lending ($50 million) and place-based economic development ($15 million);
-Provide technical assistance to six small business lenders to increase their lending capacity and/or secure CDFI status, as well as to 30 non-profits to expand and enhance the quality of their small business development services;
-Provide training to 200 non-profit practitioners to advance the readiness of specific entrepreneurship-related programs and projects.
-Expand the Latino TechNet - a broadband enabled network of computer centers that offer resources for small business owners and entrepreneurs.
ACTION PLAN:
November 2012: Release National Request for Proposals.
January 2013: Make $600,000 in grants to support Latino entrepreneurship
March 2013: Secure three national funder-partners leveraging CGI publicity (including one tech partner)
April 2013: Conduct national training for providers of small business development services
June 2013: Formalize agreements between national CDFI lenders and local partners in five markets.
December 2013: Document small business development services to 750 businesses and $10,000,000 loaned
November 2012: Release 2nd National Request for Proposals.
January 2013: Make $900,000 in grants to support Latino entrepreneurship and announce major expansion of Latino TechNet
March 2013: Secure additional national funder/ partners leveraging CGI publicity
April 2013: Conduct national training for providers of small business development services
June 2013: Formalize agreements between national CDFI lenders and local partners in five additional markets (ten markets total).
December 2014: Document small business development services to 2,000 businesses and $25,000,000 loaned
December 2015: Document small business development services to 5,000 businesses and $50,000,000 loaned

Background

The demographic trajectory of Latinos in the U.S. is among the few most important factors that will define its economic future. According to the U.S. Census, Hispanics make up 16.7 percent of the total population, accounted for over 56 percent of the total population growth in the last decade and are projected to make up 30 percent of the population by 2050.
The economic contribution of Latinos is characterized by a strong entrepreneurial spirit. The most recent U.S. Census report on business ownership (Estimates of Business Ownership by Gender, Ethnicity, Race, and Veteran Status: 2007) found that that there were 2.3 million Latino-owned businesses operating in the US, an increase of 43.7 percent from 2002, with a 55.5 percent increase in annual revenue over the same period, reaching $345.2 billion.
Since 2007, however, Latinos have experienced a dramatic economic setback as a result of a recession that was concentrated in geographies and industries in which Latinos are overrepresented. Despite this challenge, according to the Kauffman Index of Entrepreneurial Activity: 1996-2011, the entrepreneurial activity rate (the percent of individuals who do not own a business in the first survey month that start a business in the following month) among Latinos rose significantly from 2009 to 2011, greater than the rates among White, Back, and Asian populations. Latinos have responded to economic challenge with entrepreneurship.
NALCAB recognizes that small business development is among the most relevant strategies for rebuilding wealth in Latino communities and for ensuring an equitable national economic recovery. To harness this entrepreneurial spirit and create jobs through small business development, there is a need to expand the availability of culturally and linguistically relevant services that open access to markets, strengthen competitiveness and increase the flow of small business lending - specifically those that require loans in excess of $50,000.

Partnership Opportunities

NALCAB seeks funder/ investor partners to provide grant funds to support re-granting, training, technical assistance, and loan loss reserve (for attracting private capital) and below market rate debt capital, assuming a loan loss reserve coverage in the range of 8- 15 percent.
NALCAB seeks information technology companies and broadband service providers to support the development of the existing LatinoTechNet, a broadband enabled network of twelve community based computer centers that deliver bilingual information and resources to small businesses and aspiring entrepreneurs,with equipment and in-kind services.
NALCAB seeks funder/investor partners to support Program Related Investments into structured consortia of CDFI small business lenders within the NALCAB Network. The NALCAB model mitigates risk to the funder/investor while building the capacity of CDFIs and ensuring that investments go to smaller lenders (and small business clients) who otherwise may not be able to access this type of fund.

Progress Reports

March 2016

At the end of its 3-year Commitment to America, the NALCAB Network cumulatively secured $98,657,224 in new capital for business lending. To date, this capital resulted in a total of $180,430,555 in micro and small business loans going to 6,333 small businesses from across the nation and stimulated the creation of 15,494 new jobs in low-to-moderate Latino communities. To support place-based revitalization and commercial growth efforts, the NALCAB Network received a total of $37,020,551 in funding for neighborhood economic development projects, including $16.3 million awarded to the following NALCAB Network partners through the US HHS Office of Community Services: Conexin Americas (Nashville, TN), LEDC (Minneapolis, MN), LEAD-Idaho (Blackfoot, ID), Hacienda CDC (Portland, OR), Nogales CDC (Nogales, AZ), Ventures (Seattle, WA), VEDC (Los Angeles, CA), Fresno EOC (Fresno, CA), CPLC (Phoenix, AZ), Siete del Norte (Embudo, NM), MEDA (San Francisco, CA), HEDC (Kansas City), SAGE (San Antonio, TX), Mandela MarketPlace (Oakland, CA), El Pajaro CDC (Watsonville, CA), and The Resurrection Project (Chicago, IL).

Further, the Immigrant Development Center (Fargo, ND MSA), Nogales CDC, and Tierra del Sol (Las Cruces, NM) all received CDFI certification during the commitment period with assistance from NALCAB. While another four nonprofits,NALCAB (San Antonio, TX), The Resurrection Project, MEDA, and Midlands CDC (Omaha, NE) all either received financial support from the CDFI Fund or are in the process of requesting such support and plan on being certified CDFIs by the end of 2016.

Additionally, the NALCAB Network achieved the following outcomes: 34,160 small business owners received small business development service training and technical assistance,7,987 women received access to empowerment services, and 6,601 individuals received access to information technology services.

During the Commitment period, to increase the capacity and effectiveness of members of its Network, NALCAB administered over $3.2 million in grants to 50+ nonprofits serving predominantly Latino underserved communities. These grants were used to launch or strengthen programming that provides local small business owners with access to technical assistance and capital. To further improve the ability of its members to carry out asset-building activities, NALCAB provided over 250 practitioners from 75+ non-profits with training in small business development services. To undertake these efforts, NALCAB received over $6 million from Wal-Mart Foundation/Sam's Club Giving, JPMorgan Chase Foundation, Citi Foundation, Citi Community Development, Surdna Foundation, Northwest Area Foundation, Mary Reynolds Babcock Foundation, and Capital One.