Bank of America Corp (NYSE: BAC) to Provide $10 Million in Grants to Non-Profit Lenders

Bank of America Corp (NYSE: BAC) announced that it will provide $10 million in grants to non-profit lenders such as Community Development Financial Institutions to help leverage funds from the Small Business Administration and the U.S. Department of Agriculture for lending to small and rural businesses.

According to a press release from the company, the grants, which will be used as loan loss reserves, may unlock as much as $100 million worth of low-cost, long-term capital for small businesses during the next 12 months.

Microloans from the SBA and USDA are made through local non-profit lenders, which provide business training and technical assistance. To make use of the capital, non-profit lenders must set aside loan loss reserves up to 15% of the capital they are provided by the agencies, however, because of the recession, many lenders have found it difficult to meet those requirements, limiting their access to loan capital. The loan reserve grants from Bank of America Corp (NYSE: BAC) were specifically created to help community development foundations and other non-profit lenders to help meet the required reserve levels, and thereby access millions of dollars in new low-cost capital.

“Helping strengthen small businesses and new start-up companies stimulates job creation and is critical to our nation’s economic recovery. Bank of America is empowering these entrepreneurs by directing private sector capital to unlock exponentially greater amounts of federal dollars for their businesses,” said David Darnell, president of Global Commercial Banking, Bank of America. “Even the smallest grant enables a CDFI to leverage as much as ten times that amount to lend to small businesses, which helps initiate a ripple effect impacting job growth, spending and overall economic expansion.”

The announcement was made by Darnell at the National Urban League’s centennial conference in Washington D.C.

“The National Urban League commends Bank of America for the development of this innovative program,” said Marc Morial, president and chief executive officer, National Urban League. “Allowing CDFIs and other nonprofits – many of whom receive management and technical assistance through our Entrepreneurship Centers – to provide much-needed microloans to small and minority businesses nationwide will lead to increased business growth and job creation, which will boost the economy of our country.”