U.S. Bank funding helps after-school programs survive amid remote learning

September 09, 2020 | GET MORE : Articles

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Capital from the company has helped CDFIs provide PPP loans to nonprofits across the country

It’s back to school time around the country, but in many places – like Los Angeles – that means starting the year with remote learning. It’s not only a change for students and teachers, but for nonprofit programs that serve students and families. 

One of them is L.A.C.E.R. Afterschool Programs, which provides free arts, athletics and academic classes to at-risk middle and high school students at eight Los Angeles schools. But it’s ready to start the new school year thanks to a Paycheck Protection Program (PPP) loan that enabled L.A.C.E.R. to keep its staff working, giving them time to prepare.

“The thought of losing my staff was terrifying. They are a family to us. We kept everyone on our staff. We couldn’t have done it without the PPP loan,” said William Seymour Frost, L.A.C.E.R.’s founder and executive director. “When we do open, the students’ support system is still going to be there. The people we train are way more important than the subject they teach.”

L.A.C.E.R. and other nonprofits have needed financial support during these unprecedented times, but finding it sometimes looks different for them than it does for a for-profit business. Revenue sources, assets and board structures mean nonprofits can’t always easily or quickly leverage programs through traditional banks. 

That’s where community development financial institutions (CDFIs) come in. They play a critical role in bringing investment and resources to underserved communities, and those who may not be eligible for traditional small business financing, with a focus on women and minority-owned businesses and low-to-moderate income communities. And sometimes, nonprofits. 

It’s why U.S. Bancorp Community Development Corporation (USBCDC) provided $50 million in capital directly to a group of CDFIs in response to the pandemic earlier this year. One CDFI was the National Development Council's (NDC) Grow America Fund. NDC’s Grow America Fund aggregated capital for a loan fund to support small businesses and nonprofits who needed it.

“Nonprofits were not getting PPP loans in the first round,” said Daniel Marsh, NDC president. “With financial support from U.S. Bank, we were able to deliver funding to essential service providers, such as daycare centers, food pantries and after-school educators. In fact, 53 percent of our entire PPP portfolio went to nonprofits that otherwise would have been forced to shut down.” 

NDC was among seven CDFIs that received capital from USBCDC during the peak of the PPP activity in early May. 

“The CDFI community constantly struggles to raise funding to adequately meet the ever-growing demand for loan and investment capital for business owners of color and businesses located in low-income Census Tracts,” Marsh said. “At the precise moment when time was of the essence, U.S. Bank recognized the need and placed its faith in our industry.” 

The MINT Foundation is another nonprofit that received a PPP loan through NDC. As an essential organization, its founder and executive director Felicia Frazier had to ask staff to work voluntarily when COVID first hit until she could figure out what to do. MINT, which stands for Mentor, Inspire, Nurture, Train, supports more than 10,000 families a year in southern Dallas County through its food pantry, educational and enrichment programs for students and summer camp. 

“Nonprofits are a much different dynamic from a traditional small business. We don’t have a lot of assets, so it’s hard for banks to deal with a nonprofit,” Frazier said, explaining how the organization connected with NDC to secure its PPP loan. “It was so fast I didn’t even realize I got the money. It was just there in our account in a matter of days.”

A New York area nonprofit, StreetSquash, closed its doors on the squash part of its program in March when COVID-19 hit the New York City area hard, but kept other services running thanks to a PPP loan through NDC. The nonprofit youth enrichment program serves up to 400 children a year in Harlem and Newark, providing tutoring, community service, leadership and mentoring for kids age 11 through 24. 

“We used the money to pay our staff – 30 employees at two locations. We haven’t laid anyone off,” said George Polsky, the organization’s founder. “We’re a great model for this program because, except for squash, all our programs are fully functional online. Our staff is critical to make that operational.” 

Thanks to its PPP funding, L.A.C.E.R.’s staff of 76 part-time and 14 full-time employees spent the early weeks of school closures last spring planning and creating online content for their areas of specialty, which students can access at their convenience and own pace.

“A loan of $212,000 saves the agency,” Frost said. “It seems like nothing to a big company – for us, it’s everything.”