A new grant program from Bank of America will distribute $10 million in grants to nonprofit community lenders across the country, which could provide $100 million in microloans for entrepreneurs looking to start an LLC or expand their existing small businesses.
The grants will be used as loan loss reserves, which nonprofit financial institutions need as backing in order to distribute microloans from the U.S. Small Business Administration and the Department of Agriculture.
"Helping strengthen small businesses and new start-up companies stimulates job creation and is critical to our nation’s economic recovery," said David Darnell, president of global commercial banking for Bank of America. "Even the smallest grant enables a CDFI to leverage as much as 10 times that amount to lend to small businesses."
The low-cost microloans are an affordable way for small business owners to finance smaller projects. The average amount is roughly $13,000, and also comes with a low interest rate of less than 2 percent.
Microloan organizations have experienced a sharp rise in interest over recent months. The New York Times reports that many lenders have seen their number of applications double since the recession, and that the trend shows no signs of slowing.
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