To provide more business-building opportunities to minority founders, investment firm Calvert Impact Capital and impact investment consulting firm Urban Advisors have come together to launch a $12 million-plus Charlotte, NC-based impact investing fund. UP Community Fund will provide flexible loans and technical assistance to minority-owned businesses in the Southeast.
David Sharp, CEO of the UP Community Fund and a Morehouse alum, shares that almost four years ago, while at an event at a New York City church, the idea for the fund came up as the church wanted to help move the needle on the challenge of access to capital for minorities.
“If you were born poor, according to a recent Harvard study, the likelihood of you transcending to wealthy is almost impossible. One of their solutions was to move your children from the South as fast as possible to give them the chance of ascending up the ladder,” says Sharp.
According to the U.S. Department of Commerce’s Minority Business Development Agency Report, minority business owners apply for loans at approximately half the rate of non-minority business owners, and those that apply for loans are declined almost three times as often as their non-minority peers. Even when approved, minority borrowers receive rates that are 200 basis points higher than non-minority borrowers.
“That was a catalyst to pursue this idea of, how can we take capital and use it to address some of those social-economic barriers of disparity. Access to capital has been an issue prevalent in communities of color for a long time.”
With a first close of $12.15 million, the UP Community Fund came together after Sharp brought on Calvert Impact Capital’s VP of Syndications and Strategy Beth Bafford to help develop a good framework.
“Our initial funders are not from the Southeast, but they saw a need and understood what the opportunity to fund this emerging, undercapitalized market in entrepreneurs of color,” says Sharp. The initial roster of partners in the fund includes Riverside Church, New Resource Bank, MetLife Investment Management and Calvert Impact Capital.
The fund will provide loans ranging from $250,000 to $1.2 million for up to 3-year terms to minority-led small businesses and community organizations in its target markets, which include Atlanta and Charlotte. The funds can be used as growth capital, general working capital, overhead or inventory expenses, refinancing debt and more.
The fund will also provide advisory services to help entrepreneurs build and grow wealth within their community.
“Access to capital is a means to an end, which is really income-building for communities of color, and small business ownership is a big way to access wealth-building opportunities,” says Bafford.
While UP Community Fund is industry-agnostic, they’re putting a heavy focus on attracting companies with inclusive hiring practices, social impact startups and companies making products aimed at low-income communities.
