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Most entrepreneurs struggle to get loans from banks. This is a big problem for all founders, but especially for founders in marginalized communities.
Therefore, several years ago Ewing Marion Kaufman Foundation establishes a direct capitalization loan fund aimed at expanding the loan pool available to small businesses in Kaufman’s hometown of Kansas City nationwide and facilitating access to capital in uninvested communities. Did.
The Foundation announced its third bounty. dream spring, an Albuquerque-based community development finance institution (CDFI). DreamSpring also received $300,000 in funding to expand the fund to Kansas City. DreamSpring President and CEO Anne Haynes said:
Kaufman focuses on the CDFI because of its track record of funding companies that have difficulty obtaining financing from banks. “There’s another way to assess the credibility of a business,” says Shakia Webb, her manager of entrepreneurship programs. For example, the CDFI may verify an entrepreneur‘s track record of timely payment of various invoices that banks do not include in underwriting.
DreamSpring has an average loan size of $13,500 and is focused on BIPOC, women, startups, and low to middle income small business owners. But we do lend from $200 up to about $2 million. Small loans may need to be repaid in a few months, while larger loans have a three to five year repayment period.
Over the next five years, initial capital from Kauffman will continue to be repurposed as loans to other small businesses, Haines said. Ultimately, DreamSpring will have about $140 million in capital.
With an additional $300,000 in funding, DreamSpring hired its first loan officer in Kansas City. We are also building other capabilities to provide service and support locally.
Akil Cooper, who heads a year-old sign and printing company in the Kansas City area, received $7,500 in funding to purchase a CNC milling machine and expand his business to target larger customers. Eventually, he would like to purchase more industrial-sized equipment.
Kaufman has previous funding to two CDFIs of $5.3 million to AltCap in December 2021 and $3.3 million to Holy Rosary Credit Union in June 2022. For now, Kaufman has suspended further payments, according to Webb. “We want to see how her three CDFIs we funded are performing, so there are some historical numbers going on as we move forward,” she says.