One of Kansas City's most successful and important local lenders during the height of the Covid-19 pandemic is receiving a $5.3 million booster from the Ewing Marion Kauffman Foundation.
According to a Monday release, the $3 billion-asset private foundation granted $5 million to AltCap to seed a revolving loan fund that aims to increase access to capital for entrepreneurs in distressed areas of Kansas City and for those whose credit applications have been rejected by conventional lenders. The fund will focus on BIPOC entrepreneurs (Black, indigenous or people of color).
"We are excited to support AltCap's work to help increase the rate of new and successful businesses here in Kansas City," Philip Gaskin, vice president of entrepreneurship at the Kauffman Foundation, said in the release. "This grant is aligned with Kauffman's commitment to eliminating a significant barrier to the pursuit of inclusive prosperity through small business growth — the pervasive lack of access to capital."
An estimated 7.5% of small businesses in Kansas City meet the standards for a microloan of $50,000 or less, which accounts for just a fraction of estimated 178,000 small "Main Street" companies in need of capital access, the foundation reports.
AltCap, a Kansas City-based community development financial institution, also received $300,000 to develop its organizational capacity and ensure strong internal controls, efficient underwriting and appropriate technology infrastructure.
"AltCap is an ally to underestimated entrepreneurs and Kauffman's support allows us the flexibility to design and implement new alternative financing tools", AltCap CEO Ruben Alonso said in the release. "Kauffman's investment in AltCap provides a runway for our continued development and growth and will enable us to find additional ways to make capital more accessible to entrepreneurs while also helping us achieve impact at scale."
A success story in dire times
When large parts of the local economy closed down in March 2020 to try to limit the spread of Covid-19, AltCap administered the KC Region Small Business Relief + Recovery Loan Fund, an effort backed by leading business institutions like the Civic Council of Greater Kansas City and the Greater Kansas City Chamber of Commerce as well as the Kauffman Foundation.
That fund deployed more than $5 million to 178 small businesses throughout 79 ZIP codes. According to the Kauffman Foundation, that fund has had no defaults.
In addition to the relief loans, AltCap also became a qualified Paycheck Protection Program lender where it facilitated $7.9 million in PPP loans to about 400 small businesses in the Kansas City area.
