Unlocking Capital to Revitalize Community Development
Transforming Economic Investment in Black & Latinx Communities
The Desk facilitates access to flexible capital for Black and Latinx development projects, which have the potential to transform and stabilize neighborhoods through job creation and wealth-building.
We believe investor support for community developers and their projects is mutually beneficial. Supporting thoroughly vetted, transformative projects in historically Black and Latinx neighborhoods can help ensure long-term success, provide growth for small business owners with already-strong fiscal track records, and offer flexibility to investors to explore tangible but non-traditional methods to earn returns.
From small business owners to real estate developers, Black and Latinx entrepreneurs face unique challenges in acquiring capital to fund projects that could transform their communities. More than one-third of Black and Latinx small business owners seeking loans are denied, and for Black owners, the denial rate is two times higher than for whites, according to the Federal Reserve Banks’ 2020 Small Business Credit Survey. Conversely, Black and Latinx business owners tend to experience higher interest rates when loans are approved.
Alternative funding sources, such as CDFIs, are limited in the support provided to fund new ventures or expand existing businesses. Equity investments are a pivotal piece to help Black and Latinx entrepreneurs thrive. However, 80 percent of capital needs for Black and Latinx owners go unmet, resulting in a $146 million gap they cannot secure, according to Next Street. In addition to equity investments, community developers require other types of flexible capital sources to bridge funding gaps, including credit enhancements, grants, and low-interest loans.
Impact of Investment
Providing capital to community-oriented projects advances catalytic developments that generate jobs, create wealth, and improve the quality of life in these neighborhoods, creating impact that extends far beyond the initial investment.
“Systemic change to traditional capital sources is critical to making flexible low cost capital (debt and equity) available for wealth-building and strengthening communities of color.”
— Lyneir Richardson, CEO, Chicago TREND