Community lenders, local corporate partners and the City of Charlotte today announced the launch of “Charlotte Small Business Growth Fund,” a fund aiming to provide $40 million in loans to more than 2,000 underserved small businesses over the next four years. This is one of the largest non-pandemic access to capital opportunities directed at small businesses in the history of Charlotte.
Loans and outreach will be done through community development financial institutions (CDFIs) whose mission is to support underrepresented small businesses; it is anticipated that more than 70% of these loans could benefit entrepreneurs of color.
“As a top destination for new businesses, Charlotte has one of the most vibrant economies in the country,” Charlotte Mayor Vi Lyles said. “With the Charlotte Small Business Growth Fund, we aim to level the playing field, ensuring every resident shares in our city’s growth and has equitable access to entrepreneurial opportunities.”
The fund is managed and operated by Scale Link, a CDFI that expands access to inclusive small business lending through its nationwide secondary market to buy and sell small business loans originated by CDFIs. Catalytic funding for Charlotte Small Business Growth Fund comes from Ally Charitable Foundation, Atrium Health, Bank of America, the City of Charlotte and Truist.
The CLT Alliance Foundation leveraged its access to capital to establish the fund and is providing ongoing support and coordination. Charlotte Small Business Growth Fund delivers on part of the Mayor’s Racial Equity Initiative launched two years ago.
Charlotte Small Business Growth Fund details include:
- Available loans range in size from $1,000 to $250,000.
- Loans have fixed interest rates of 9% to 12%; origination and application fees range from 3% to 5%.
- Average loan length is 48 months.
- The fund is open to all businesses headquartered in Charlotte, but is especially designed for businesses that do not qualify for traditional bank loans due to age of the business, credit history, or lack of collateral.
- Advising for applicants is available from participating CDFIs and other local partners to help entrepreneurs qualify for loans.
As one of the fastest-growing cities in the United States, Charlotte and its small business sector are flourishing. However, not all Charlotte businesses have the same access to capital and resources to grow. For instance, only 14% of minority-owned Charlotte businesses have access to a bank loan at start-up.
Nearly 40% of Charlotte’s small businesses are minority-owned, meaning it is an economic imperative to expand access to capital for these entrepreneurs. CDFIs are mission-based lenders that specialize in delivering capital to underserved communities, making them exceptionally well-positioned to close Charlotte’s small business financing gap. However, CDFIs themselves are often undercapitalized, which is why this fund provides essential liquidity to Charlotte’s frontline small business lenders.
“The economic opportunities for small business owners in Charlotte right now are truly exciting,” Brett Simmons, CEO of Scale Link, said. “The Charlotte Small Business Growth Fund will deliver the capital community-based lenders need to support the city’s diverse, growing small businesses. We’re honored to work alongside our CDFI partners, in collaboration with the City of Charlotte, our investors, and everyone at the CLT Alliance Foundation, to support Charlotte’s Entrepreneurs.”
“The CLT Alliance Foundation is proud to play a supporting role in providing greater access to the number one resource small businesses need to grow their businesses, and our economy by extension – capital,” Nate Hogan, president of the CLT Alliance Foundation, said.
Charlotte Small Business Growth Fund will boost the local lending capacity of CDFIs through an innovative platform – operated by Scale Link and LoanWell – that will match businesses seeking funding with one of six participating CDFIs. CDFIs participating in Charlotte Small Business Growth Fund include Ascendus, ASPIRE Community Capital, Business Expansion Funding Corporation (BEFCOR), Carolina Small Business Development Fund (CSBDF), andDreamSpring. Scale Link will leverage its innovative secondary market model to purchase and sell loans made by CDFIs through the fund, helping expand CDFI liquidity and enabling them to scale their lending.
Business owners interested in receiving funding through Charlotte Small Business Growth Fund can learn more and apply online here.
