Bank of America Corp. is now offering grants of up to $25,000 to help small businesses make their down payment on commercial real-estate loans, as a fresh example of financial firms and regulators taking steps to address unequal lending practices.
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Bank of America is working with businesses in these areas from the startup phase up to when they have $5 million a year in revenue.
An example of a potential candidate for the down payment grant program would be a business owner who has been renting space and who wants to own, but they may not have money for the down payment.
The bank’s 50% down payment grant of up to $25,000 is aimed at reducing or eliminating the down payment barrier while leaving the business owner with more cash to manage their business on a day-to-day basis, the bank said.
Program eligibility requirements for the down payment grant include 51% women or minority business ownership, owner occupancy, and a 5% minimum down payment from the applicant. The grant covers up to $25,000 for half of the minimum 10% down payment in loans issued under Small Business Administration guidelines.
The minority business owners covered in the program include Black or African-American, Hispanic or Latino, Native American, Asian-American and Pacific Islander.
Also this week, Bank of America got a mixed reception from people on social media to a program to offer no down payment mortgages to African-Americans and other people of color in the U.S.
The bank’s freshly launched small business down payment grant program comes as the U.S. Federal Reserve and other banking regulators work to update the Community Reinvestment Act (CRA) in an effort to increase the rate of home ownership in low income areas.
“We commend the regulatory agencies for working together to modernize the framework for CRA,” said Jill Calabrese Bain, small business integration and transformation executive at Bank of America, an in interview. “We support the CRA’s objectives as an effective tool for fostering economic opportunity and meeting the credit needs of underserved communities.”
For Bank of America, the small business down payment grant marks the latest in a series of services aimed at small businesses and minority borrowers.
Other resources include its secured credit offerings of $1,000 to $50,000 to business owners, an access to capital directory designed with Seneca Women and the bank and a Start a Business Center.
Bank of America has been surveying business owners, including women and minority business owners, through its Small Business Owner Report for the last decade. Fifty-six percent of African-American business owners report challenges accessing capital and 60% of women-led businesses report not having the same access to capital as male-owned businesses.
The National Association of Women Business Owners (NAWBO) is among the community groups that Bank of America is working with to create awareness for the small business down payment grant program.
The bank also works with community development financial institutions across all 50 states to provide loan funding.
Also Read: Bank of America overdraft fee revenue falls 90% on 35 mln consumer checking accounts
While such moves by banks rarely move stock prices, they are baked into the regulatory requirements for lenders to serve low-income and minority communities.
On this front, Michael S. Barr, who is the recently-named vice chair for supervision of the Federal Reserve Board is speaking on the topic of making the financial system safer and fairer in a speech on Wednesday, Sept. 7 at the Brookings Institution at 2 p.m. Eastern Time.
Barr is serving in a post created by the Dodd-Frank Act to head up the Fed’s supervision and regulation of banks and other financial companies.
Source: marketwatch.com
