Investment in Communities
HAF operates an Americas community loan program to foster new approaches and expand the reach of proven solutions that have the promise of developing an ongoing funding stream that will return the capital investment. Initial interviews with community-based organization (CBO) leaders have made clear that they have specific needs that go beyond that of a typical capital campaign aimed towards a building. What CBOs need is funding for the essentials that go inside the structures that will generate revenue and make the services financially self-sustaining.
CBOs need innovative start-up capital for hiring staff and establishing new lines of services. Because most capital resources (federal and private) are focused on new buildings, the most urgent need is working capital to hire staff and infrastructure (information technology, training, financial operations) that will help expand or start new revenue streams and reimbursable services. CBOs have requested loans clustered around the $1 to $1.4 million range and interest rates no higher than 3% interest. Additionally, the structure of the loan matters and requires repayment terms with longer amortization periods, i.e., an initial reduced or delayed payment.
Organizations have reported that a one to two-year deferment in principal reduction would allow for start-up of new services and development of stable revenue streams and loan repayment opportunities. Paydown flexibility is essential as the lag between services CBOs provide and receiving payment from government funders for those services is stretching beyond 90 days with some delays of up to 9 months becoming more common. By fostering reimbursable lines of services and new revenue streams, the financial stability of CBOs will be enhanced and allow for repayment of capital and interest to replenish the Americas loan fund to support its ongoing mission.