NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

National microfinance nonprofit organization Grameen America today announced the launch of its $17.5 million Social Business Fund II (“SBF II” or “the Fund”), a social impact investment opportunity that will provide nearly $200 million of cumulative loan capital to low-income minority business owners over its five year life.

SBF II is Grameen America’s second social business fund focused on supporting low income entrepreneurial women in the United States with affordable microloans, financial literacy training and credit building opportunities. Loan capital raised will be used to fund microloans to Grameen America borrowers, particularly as they protect or rebuild their economic livelihoods in the midst of the ongoing COVID-19 pandemic.

Over SBF II’s five-year, fixed life, the $17.5 million raised in the Fund will be constantly redeployed as new loans as repayments occur, resulting in almost $200 million of cumulative loans.  In its first year, investors have agreed to forgo 50% of their return which will be reinvested as loans to Grameen America’s borrowers.

The investment opportunity is part of Grameen America’s Economic Relief and Recovery Fund, a package of relief measures developed by the microfinance organization in 2020 to respond aggressively to the economic impact of the COVID-19 pandemic.

“The Grameen America Social Business Fund II is part of our effort to provide critical support to the economically underserved women in our microfinance program as they continue to manage through the ongoing crisis,” David Gough, Senior Vice President & Chief Financial Officer, Grameen America. “Our investors in SBF II will help create an inclusive economic recovery for the 52,000 minority businesswomen in our program by putting their impact investment dollars to immediate use in the form of critical microloans.”

Since Grameen America’s inception in 2008, the organization has supported minority women small business owners living below the poverty line in 22 branches across 14 cities in the U.S. Grameen America has disbursed over $1.6 billion to more than 132,000 low-income women through its unique social capital model pioneered by Nobel Laureate Professor Muhammad Yunus.

In September 2020, Grameen America released 18-month findings from the first-ever randomized controlled trial of microfinance in the U.S. Data from the study validated the organization’s proven, scalable model of reducing material hardship for low-income women owners of small businesses while increasing their credit worthiness, business earnings, and nonretirement savings.

To learn more about the Grameen America SBF II and other opportunities to support low-income women small business owners, contact David Gough at dgough@grameenamerica.org.

Photo courtesy of Christina Morillo.