Ventures borrows funds from the Small Business Administration (SBA) as an intermediary lender to then lend to Ventures clients. We have been an SBA intermediary lender for 17 years. With the CARES Act in place, we are pleased that the SBA is making up to six months of principle and interest payments on behalf of our clients who have SBA funded microloans. This is especially important for our clients as they are micro, low-income, minority-and women-owned businesses who are struggling with loss of revenue and jobs because of COVID-19.
While we are proud to be able to offer microloans to our clients through the SBA, these funds also have restrictions and requirements that motivated Ventures to establish our own loan fund in 1995. In addition to using the fund for risk mitigation and diversification, we also use it for borrowers who are ineligible for SBA loan funds, including but not limited to individuals who are considered to be a “high risk” loan, including:
- ITIN holders or those with certain immigration statuses
- Transgender individuals whose identity verification does not meet SBA standards
- People starting brand new businesses
- An individual with a very low credit score
Because of our commitment to serving exclusively low-income individuals with limited access to opportunity, 40% of our loan portfolio is lent with non-SBA loan funds. Moreover, 100% of these borrowers belong to a minority group (including women and LGBTQ) and 74% are people of color. This means that only the borrowers with the least privilege—who could not access SBA loans—are still responsible for their loan and will not receive benefits through the CARES Act. Ventures responded to this inequality by pledging to provide equivalent payments to borrowers with non-SBA funds. This amounts to $7,471.18 per month or $44,827.08 for six months. This ensured that we have equity within our lending practices regardless of a borrower’s background or identity. We are so grateful for the donors that have contributed so far to this effort. Thank you to Columbia Bank, Northwest Area Foundation, National Association For Latino Community Asset Builders (NALCAB) and one individual donor that have donated a total of $36,0000.
If you are interested in making a donation to Ventures to support this effort, please contact Beto Yarce at [email protected]. These covered loan payments act as business grants, helping businesses conserve cash and respond to the challenging environment small businesses face right now.