Photo by Sagette Van Embden Productions
Providing affordable, responsible financing to underserved borrowers often requires creative capital structures. Recognizing the unique needs of CDFIs to drive meaningful impact while also maintaining their solvency, OFN and HSBC Bank USA partnered to establish the Good to Grow CDFI Investment Fund (G2G Fund) in August 2018.
Through long-term, flexible equity equivalent (EQ2) investments up to $2 million in CDFIs that are active in HSBC Bank's retail network (branches in California; Connecticut; Washington, D.C.; Florida; Maryland; New Jersey; New York; Pennsylvania; Virginia; and Washington), OFN and HSBC Bank are expanding the flow of much-needed capital to community development projects, affordable housing, community facilities, and small businesses around the country.
To date, OFN and HSBC Bank have approved 11 deals totaling $15.5 million through the $25 million G2G Fund. One CDFI newly added to the G2G portfolio is New York City-based Grameen America.
What the Good to Grow Fund Investment Means for Grameen America
This past April, OFN and HSBC Bank closed on a $1.5 million EQ2 investment with Grameen America. Founded in 2008 by renowned father of microfinance and Nobel Peace Prize winner, Muhammad Yunus, Grameen America is a CDFI that focuses exclusively on U.S. microenterprises owned by low-income women.
“As a nonprofit with the remit of assisting low-income entrepreneurial women access capital, HSBC Bank and Opportunity Finance Network’s $1.5M investment in our program reflects a shared mission for financial inclusion across the U.S,” stated David Gough, Senior Vice President and Chief Financial Officer at Grameen America.
Since becoming an OFN member in 2012, Grameen America has benefited from OFN’s various networking events and resources. Now the CDFI is reaping the benefits of the first capital investment in their organization facilitated by OFN.
“This investment only reaffirms our ongoing partnership with OFN and will be used to fund our microloan portfolio in New York, California, New Jersey, and Florida to significantly impact the lives and communities of women entrepreneurs affected by poverty,” Gough added.
Blending Technology with Tradition
Currently managing a portfolio of 21 branches across 14 U.S. cities, Grameen America continues to blaze a trail in microfinance. With cumulative disbursements of more than $1.1 billion comprising 452,000+ loans and a repayment rate of 99 percent, Grameen America is wildly exceeding the expectations of those who doubted microfinance could work in the U.S.
Using the traditional group lending model, Grameen America makes individual loans to women who are organized into five-person groups. Groups are required to meet weekly with a Grameen America representative and can become powerful peer support networks over time. Each group is empowered to make recommendations around group membership and loan upsizing. This is a high touch model and Grameen America has successfully integrated the efficiencies of technology with all transactions taking place digitally.
From a Costa Rican mother of two who started her own fruit stand business last year in Miami to a mother of five who launched a full-service catering business in Harlem after graduating from culinary school in 2009, Grameen America is helping to drive transformational change around the U.S., beginning with each borrower and her family.
Along with financing, Grameen America offers a holistic range of other services, including credit counseling and the Promotoras pilot program, which aims to improve the health and well-being of low-income women in the Bronx through a community health worker approach in a non-clinical setting.
Why Grameen America Stands Out
Impressed by Grameen America’s ability to blend the hands-on approach of community lending and the low-cost, scalability of technology through its nearly cashless, paperless operations, OFN is delighted to partner with HSBC Bank to support Grameen America’s work around the nation.
“Grameen America has clearly demonstrated that making small loans to women-owned businesses can lift the economic boat of our country and can be done in a financially prudent way,” stated Christopher Chaplin, OFN’s Investment Officer. “The Grameen team has used technology in innovative ways to accomplish its mission and continues to explore new payment systems. We are both proud and excited to work with the Grameen team.”
Learn more about the Good to Grow Fund.
Learn about preliminary results from an ongoing impact evaluation of Grameen America conducted by social policy research organization MDRC.