Bank of America targets more investment funds supporting various small businesses
America’s second-largest bank by assets announced on Thursday, May 20, that it was increasing its equity investment target in minority funds from $ 200 million to $ 350 million.
These funds specialize in providing capital to Black, Hispanic-Latin American, Asian, Native American entrepreneurs, other under-represented minorities, and women entrepreneurs, who are seeking capital to grow their small businesses.
In less than a year, Bank of America committed more than $ 250 million to 90 investment funds across the country, according to a press release.
In June 2020, the bank launched a $ 1 billion pledge to increase economic opportunities in underserved communities, which was then increased to $ 1.25 billion in March and will be rolled out in five years.
VamosVentures, L’Attitude Ventures and Ulu Ventures, all based in California, are among the funds that have benefited from this engagement and which focus on Latinx entrepreneurs. Other recently closed equity investments include venture capital funds such as Elevate Capital (OR), Cleo Capital (CA), Zane Venture Fund (GA), Avenue Growth Partners (DC), to name a few. -a. These are companies that are also run by various fund managers and fund small businesses across the United States.
Bank of America is also leading a separate $ 50 million commitment in equity investments to small banks, known as Minority Depository Institutions (MDIs) and Community Development Financial Institutions (CDFIs), which have a wider arm to reach rural and low to moderate income areas. communities.
For this specific type of support, Bank of America acquires up to 4.9% of the ordinary shares in selected IDMs and CDFIs. Through these equity acquisitions, these small banks strengthen their balance sheets and can provide better access to capital to cover general loans, housing, neighborhood revitalization and other banking services.
To date, it has made investments in 17 of these establishments.
“Equity investments in minority funds, MDIs and CDFI banks help close a persistent gap in access to growth capital. By providing this capital, we are helping to level the playing field and open more doors for minority-led businesses, entrepreneurs and innovation, ”said Brian Moynihan, CEO of Bank of America.