The Valley Economic Development Center has secured a $2 million grant from Sam’s Club that it plans to leverage into a $20 million national microlending fund.
The Van Nuys non-profit will begin the program at its offices in California and expand to Nevada, Utah, Arizona, Idaho and Oregon. The strategy is to loan money to other makers of micro loans, which typically are no more than several thousand dollars.
The money will be used as a loss reserve for loans made by other lenders. According to VEDC, this will multiply the impact tenfold. The fund’s goal is to lend to 2,500 companies in low- or moderate-income neighborhoods.
The grant is part of a five year Small Business Economic Mobility project at Sam’s Club, a subsidiary of Wal-Mart Stores Inc. in Bentonville, Ark.
“VEDC’s National Microfinance Fund is a key part of our philanthropic strategy to scale micro and small business loans to underserved business owners while building the capacity of mission-driven lenders,” said Gayatri Agnew, director of opportunity at the Walmart Foundation and Sam’s Club Giving Program, in a statement.
Roberto Barragan, chief executive of VEDC, said entrepreneurs continue to have a hard time accessing capital, especially if they are female or minority.
“Sam’s Club and the Sam’s Club Giving Program have a deep understanding of small business nationally. We appreciate their willingness to be innovative in addressing the access to capital gap by providing philanthropic investment to help VEDC serve small businesses as they create new jobs,” he said in a statement.