Online Notice for the SSBCI Blended Capital Fund
NJEDA is looking to utilize a portion of the State Small Business Credit Initiative (SSBCI) allocation to investment in a blended capital fund to achieve two major goals:
- Provide operational support to increase lending volume to small businesses, particularly SEDI-owned businesses and business in underserved communities.
- Provide capital to support the ability of community lenders to increase their lending and take new risk.
In order to achieve this NJEDA would like to understand what successful models of blended capital funds that have been administered before for other states to serve similar needs.
This model would have to incorporate these factors:
- Include an investment into a fund by NJEDA.
- Model would have to meet the structure of SSBCI loans participation programs as to US Treasury statute and rules and provide access to affordable credit to small businesses in New Jersey.
- The loan terms offered to small businesses would be determined by NJEDA.
- The model would have to incorporate the fund bringing on an entity that would be identified as a fund manager to manage the loan portfolio for the fund.
- The fund would have to have the demonstrated ability to leverage private, foundation, philanthropic, and private sector capital to match NJEDA’s investment of $50 million by utilizing $50 million from US Treasury from the State Small Business Credit Initiative (SSBCI) in an expedited time.
- The entity would need to utilize a fund manager or portfolio manager which could be CDFI, and the manager would be required to then recruit other CDFIs and MDIs to service business leads, take applications, originate loans, process loans through closing, and then administer the loans.
- Ability to carry out all reporting deemed necessary by US Treasury and NJEDA.
The model would need to be able to show how NJEDA’s investment would support a fund manager that will establish a place-based loan program created and framed out by NJEDA on how to address the capital needs of small businesses and nonprofit organizations with a focus on under-resourced and under-banked communities.The fund will exist as a new special purpose vehicle set up to purchase a standardized, affordable loan product originated by participating community lenders across New Jersey. An ideal fund will be designed to: create high-quality services and support for small businesses, gain maximum leverage from limited public sector resources, strengthen the local Community Development Financial Institution (CDFI) and Minority Depository Institution (MDIs) market, and build a sustainable, flexible, and scalable platform that will continue for years to come. Additionally, all allocations must be met with at least a federally mandated 1:1 private/public capital match in each transaction, yielding a $100M total fund for the successful manager to manage for fees and carry.
The objective of this is to seek entities that may have the ability or similar experience with administering this model. If an entity exists and has the ability to carry out this initiative and have a proven track record, then NJEDA would like to get all interest and demonstration of this model.
Entities that feel that they have the experience and qualifications with such model, or a similar model can respond to this notice via email. Interested applicants should contact the NJEDA via email at SSBCI_info@njeda.com by no later than June 20, 2022.
This email must include:
- A detailed response that layouts the model used, previous states that the entity worked with, and include the success and/or failures of this fund (includes business leads received, applications received, applications closed).
- Include the structure and administration process of recruiting the fund manager and other CDFIs to support this initiative.
- Any documentation, reporting, or presentations to support this model should be provided.
- Demonstrated successful ability to leverage large amount of private capital in a short time span. Lay out scenario and demonstrate how this was done.
- The detailed structure on how the NJ SPV would be setup and administered.
- Entities that respond must have demonstrated experience of creating funds for this purpose and the ability to identify potential partners to support the fund.
- Entities must have previous experience with this model and have serviced at least 3 states.