New Majority Capital: CCL's newest Lending Partner!
Updated: Sep 13, 2022
Community Credit Lab is excited to announce our newest partnership with New Majority Capital. New Majority Capital is focused on closing the racial and gender wealth gaps by training and supporting BIPOC entrepreneurs to acquire businesses with retiring owners that have strong cash flows and customer bases that have between $300k - $1.5mm in EBITDA. They work one-on-one to support individuals through the acquisition process by providing consulting, direct access to legal and accounting support, and post-acquisition back-office function support.
"We are thrilled to be innovating with Community Credit Lab on a character based lending model to break the cycle of needing money to make money in order to own business assets. CCL sees the value of providing non-extractive, pre-acquisition financing to underserved BIPOC and Women who would not have the opportunity otherwise to be able to embark on the path of entrepreneurship through acquisition." Havell Rodrigues, New Majority Capital Founding Partner
The path that has been most promoted for business ownership has been that of traditional entrepreneurship by starting a business. However, the team at New Majority Capital knows that starting a business can be challenging, especially for BIPOC entrepreneurs given a history of exclusion and predatory financing practices that limit wealth-building opportunities and connection to networks that enable opportunity. While there is more money flowing to venture capital funds focused on underestimated entrepreneurs or money flowing to venture funds managed by underestimated General Partners, this is just making a small dent in business ownership opportunities. Further, the path of venture-backed entrepreneurship to close the wealth gap is also highly dependent on the concepts of meritocracy within the traditional financial system, which is not relevant to solving the problem of wealth inequality.
New Majority Capital believes that a more widely accessible pathway to business ownership is through acquisition — typically from a business owner that is retiring. It means stepping into a business that has revenue streams from existing customers that is looking for someone to carry the organization forward. However, for people who did not grow up in a family business, or get an MBA, purchasing a business may seem daunting; where to begin may feel overwhelming. Further, standard financing options (SBA 7(a) or other mainstream lenders) may require the entrepreneur to put down a portion of the acquisition costs from their own capital to indicate their “skin in the game.”
These requirements often create barriers for BIPOC entrepreneurs and perpetuate the cycle of needing to have money in order to make money.
New Majority Capital wants to close this gap for entrepreneurs to enable the accessibility of business acquisition for more BIPOC entrepreneurs that are interested, but face financial challenges. As such, they are creating a Down Payment Assistance Fund to provide 0% interest loans to support BIPOC entrepreneurs to put down the required capital to initiate the acquisition transaction and cover legal and financial diligence costs incurred before the transaction closes. CCL is supporting to pilot this fund with an initial $100,000 loan to New Majority Capital to test and build a track record for this concept with the goal of removing barriers to entrepreneurship through acquisition for people.
Summary: New Majority Capital Down Payment Assistance Program
Pilot Size: $100,000
Estimated Time to Deploy Capital: 6-Months
Estimated Number of Loans for Pilot:
1 Loan from Community Credit Lab for New Majority Capital to directly manage capital by lending to finance small business acquisitions
Program Type: Intermediated Investment*
Use of Funds: to fund Commercial Loans for Small Business acquisition costs
More from New Majority Capital:
Impact Entrepreneur: Closing the Wealth Gap via Entrepreneurship through Acquisition
*Intermediated Investments: The New Majority Capital (NMC) program introduces a new program type for Community Credit Lab (CCL). CCL channels funds to another entity that will coordinate and manage small business loans – in this case, small business loans for business acquisition costs that will be managed directly by New Majority Capital. Once these loans are repaid in full to NMC, NMC will repay CCL in full for the loan from CCL to NMC.