BBVA recently completed its 49th investment in community development financial institutions (CDFIs), moving its total investment in the community catalysts to $100 million in the U.S. three months ahead of its five-year target.
CDFIs are critical engines of opportunity in low-income communities, providing capital and technical assistance to those who don’t have access to traditional bank financing. As one of only a handful of financial institutions in the U.S. that actively support them, BBVA helps these private financial institutions deliver responsible, affordable lending to help low-income, low-wealth, and other disadvantaged people and communities join the economic mainstream.
How BBVA supports CDFIs
“By financing community businesses—including small businesses, microenterprises, nonprofit organizations, commercial real estate, and affordable housing developers—CDFIs can spark job growth in hard-to-serve markets,” said Reymundo Ocañas, Director of Communications and Responsible Business for BBVA USA. “They put community first, and they have had a proven track record of making an impact in those areas of America that need it most.”
Ocañas: CDFIs can spark job growth in hard-to-serve markets.
During the bank’s five-year commitment period, it partnered with 28 Community Development Financial Institutions (CDFIs) across its footprint to provide more than 100 equity equivalent (EQ2) loans, equity and stock purchases totaling $54 million. These efforts helped to increase CDFI lending capacity at the community level and provided financial resources for small business lending and training, as well as programs that support and develop healthy communities including affordable housing, childcare, health and transportation initiatives.
CDFIs are critical engines of opportunity in low-income communities, providing capital and technical assistance to those who don’t have access to traditional bank financing. BBVA USA has invested $100 million in support of CDFIs, achieving its five-year commitment three months ahead of schedule. - The Storyhive
How CDFIs help communities
One of the bank’s largest and arguably most impactful investments the bank made over the last five years was its $12.8 million investment to the Low Income Investment Fund (LIIF), which creates pathways of opportunity for low income people and communities. The BBVA capital investment in LIIF provided support for community-building initiatives in Birmingham, Ala., as well as a number of communities across Texas and California.
Ocañas: BBVA’s capital investment plays an important role in the economic cycle of improving low to moderate income communities.
“Through LIIF’s work in financing housing for working families and charter schools -- as well as projects that support green buildings and healthy food markets -- BBVA’s capital investment plays an important role in the economic cycle of improving low to moderate income communities,” said Ocañas, who also serves on the board of directors for LIIF.
BBVA grants also provided significant support for PeopleFund, a CDFI which provides small business loans as well as business assistance and education to people with otherwise limited access to such resources. “PeopleFund’s financial and educational assistance to entrepreneurs in emerging neighborhoods has helped create thousands of jobs and empowered even more Texans on a path to financial stability and independence,” said Ocañas
For example, PeopleFund in Houston provided support and small business loans to local entrepreneur Margo Jordan-Baines, who established Chicks with Class in 2013 as an online retailer before restructuring her business in 2016 into a brick and mortar store. The organization offers enrichment programs for young kids with the mission to blossom young girls and boys into young adults who will help shape the world into a better place. By partnering with local non-profits, Chicks with Class hosts day camps, etiquette classes and empowerment programs, then donates a portion of all proceeds to each partner organization.
Through BBVA equity equivalent funds, PeopleFund was able to make loan payments on behalf of Chicks with Class in the aftermath of Hurricane Harvey, allowing the business to recover and Jordan-Baines to focus on her family and home after the storm. Jordan-Baines continues to work with PeopleFund’s business coaches and has received second place in the first edition of the BBVA Momentum competition in the U.S.
Margo Jordan-Baines (pictured right) of Houston's Chicks With Class won $25,000 for second place in BBVA's first Momentum U.S. competition in 2017. BBVA Momentum is the bank's five-month accelerator program designed to help social entrepreneurs maximize their social impact and potentially receive investment opportunities.
In addition to the role they play in economic development, CDFIs are also well-positioned to meet the lending needs of communities recovering from disasters. “BBVA’s geographic footprint has been dramatically impacted by disasters in recent years, including significant flooding, tornadoes and hurricanes,” said Ocañas. “The bank’s ongoing support of CDFIs ensures that they are prepared to provide loans, investments, training and technical assistance in the aftermath of a disaster, and help communities get back on their feet.
Ocañas: We remain committed to providing support for community economic development in the communities where we live and work.
“While we are proud to have reached this $100 million benchmark, this is by no means an endpoint for us,” said Ocañas. “We remain committed to providing support for community economic development in the communities where we live and work, and we expect CDFIs to continue to play a prominent role in our efforts.”
For more information on the bank’s work with CDFIs, click here.