Citi has launched a $200m Communities at Work Fund to fuel small business lending in low-wealth and low-income US communities.
The Citi Communities at Work Fund will provide financing to both nonprofit and for profit Community Development Financial Institution (CDFI) loan funds that will then lend to local businesses in low-income communities.
Citi will provide $199m of capital through a combination of equity and loans with Calvert Foundation and Opportunity Finance Network (OFN) contributing the balance.
Calvert Foundation and OFN, which have market expertise in CDFI Loan Funds, will manage the investment activity of the fund as well as its compliance and reporting. Calvert Foundation will manage lending and fund administration. OFN will manage marketing and compliance. Citi will contribute underwriting and risk management expertise.
Vikram Pandit, CEO of Citi, said: “We recognize that too many small businesses, microenterprises, charter schools and community service institutions simply do not have access to credit, yet they are engines for economic growth. The Communities at Work Fund will leverage the expertise of the leaders in the community development finance sector and provide much-needed financing in these markets.”
Shari Berenbach, president and CEO of Calvert Foundation, said: “Small businesses are the engines of local economies, but the entrepreneurs behind these businesses often have the most trouble getting financing. These businesses are withering in the absence of financing. By lending prudently and productively in markets outside the mainstream, the Communities at Work Fund will drive real change for underserved communities while working to provide financial returns for investors.”
Mark Pinsky, president and CEO of OFN, said: “CDFIs who serve urban, rural and reservation-based markets in all 50 states have experienced increased demand throughout the recession – and we fully expect that trend to continue. We commend Citi for having the foresight to invest in the opportunity markets of today to help forge a better tomorrow.
“The Communities at Work Fund will provide immediate and much-needed capital in many of the nation’s most distressed markets, stimulating local businesses and spurring job creation.”