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Morgan Stanley (NYSE: MS) and the Local Initiatives Support Corporation (LISC) together have launched a Small Business Loan Fund to support commercial expansion and create jobs in communities battling economic decline.
“Small businesses too often lack sufficient capital to build and grow,” said Audrey Choi, Managing Director and Head of Global Sustainable Finance at Morgan Stanley. “This fund will provide financing for small businesses seeking to acquire the resources they need to expand, and therefore contribute to the economic development of the communities in which they operate.”
Morgan Stanley is providing $10 million in debt financing and equity capital to help launch the Small Business Loan Fund, while LISC is allocating its federal New Markets Tax Credits (NMTC) to the fund. NMTC is a tax credit program administered by the U.S. Department of the Treasury to bring private investment dollars to low-income neighborhoods.
Over the next year, the fund expects to support businesses within some of the 31 urban areas where LISC is already working to revitalize distressed neighborhoods, including parts of Chicago, Detroit, Indianapolis, Los Angeles, Milwaukee, New York City, Phoenix, San Diego and the San Francisco Bay area. It will also seek to support rural communities where LISC operates. The fund will make qualifying loans under the Small Business Administration 504 program, which allows businesses to buy, build or expand facilities and purchase equipment. LISC and Morgan Stanley are partnering with CDC Capital Markets, a leader in the SBA 504 market, to source and manage loans for the fund. The fund could be expanded in the future to reach more businesses in more communities.
“Even the most successful small businesses in many of these neighborhoods have a tough time accessing the capital they need to grow,” said Kevin Boes, President of New Markets Support Company (NMSC), a LISC affiliate that manages New Markets Tax Credit investments. “With this fund, we can offer a loan product at reasonable rates, so small businesses can maximize their cash flow and build their business, despite tight credit markets.”