Minority Business Development Agency Awards $1.68 Million to Fund Innovative Access to Capital Projects for Minority-Owned Businesses
Wed, 10/26/2022 – 14:42
The U.S. Department of Commerce Minority Business Development Agency (MBDA) has extended awards for the Access to Capital Innovative Finance Grant to two projects that will address historical barriers faced by minority business enterprises (MBEs). Through potentially disruptive, scalable solutions, these projects will leverage non-traditional financial resources (such as non-bank lenders, minority depository institutions, and FinTech Lenders) to provide MBEs with unique solutions to access capital.
“The Biden-Harris Administration believes that minority-owned businesses are the backbone of the nation’s economy and are vital to the communities they serve,” said U.S. Secretary of Commerce Gina Raimondo. “Providing minority-owned businesses with tools and support to access capital will ensure these businesses can thrive without historic barriers infringing on their success.”
“MBDA is committed to breaking down the minority business community’s greatest barrier to success: access to capital,” said Under Secretary of Commerce for Minority Business Development Donald Cravins. “To expand access, we need to not only open the doors to traditional funding often closed for MBEs, but also construct new gateways to non-traditional capital sources. MBDA’s mission to create an equitable business ecosystem must be guided by innovation, which is exactly what FinRegLab’s and the National Association for Latino Community Asset Builders’ pioneering proposals deliver.”
MBDA Access to Capital Innovative Finance Grant Awardees:
FinRegLab, Incorporated (Washington, DC) is a non-profit innovation center that tests new technologies and data to inform public policy and drive the financial sector toward more responsible and inclusive best practices. FinRegLab, Inc. was extended an award of $884,559 to study innovative alternatives to traditional credit scoring for MBEs. Their pilot program will encourage inclusive methods of the underwriting of loans to MBEs using automated cash-flow data. According to FinRegLab, underwriting based on cash-flow data has the potential to change the MBE ecosystem if adopted on a large scale.
The National Association for Latino Community Asset Builders (NALCAB) (San Antonio, TX) is a hub of 180+ non-profit organizations serving Latino communities throughout the United States, preparing organizations to serve their communities through training, access to funding, professional development, public policy, and more. NALCAB was extended an award of $792,500 to increase capacity for non-profit lenders through a flexible loan guarantee product, the Small Business Loan Guarantee (SBLG), which provides 25-50 percent coverage on well-underwritten loans. NALCAB plans to engage non-traditional lenders and provide them with technical assistance, improved lending technology, systems and processes, and training to utilize the SBLG fund.