Charter Communications said Thursday that it has teamed with investment banks to create the Spectrum Community Investment Loan Fund, focused on making loans through community development financial institutions (CDFIs) to small businesses that help meet core needs in underserved communities within its 41-state footprint.
The fund will invest $10 million in capital by the end of 2021 and will make loans of up to $1 million to each CDFI. In addition, Charter said it will provide each CDFI with a separate additional grant for extra training and The Loan Fund will invest $10 million in capital by the end of 2021, making loans up to $1 million to technical expertise.
Charter has engaged Cabrera Capital Markets, a diverse-owned investment bank based in Chicago, to spearhead the due diligence process on the Loan Fund’s first three CDFI investments. Cabrera Capital Markets has partnered with the Local Initiatives Support Corporation (LISC), one of the nation’s largest CDFIs, to supplement its CDFI underwriting capabilities.
Siebert Williams Shank & Co. and CastleOak Securities, L.P., two other diverse-owned investment banks, will provide due diligence support and related advisory services on its future CDFI investments.
“Charter is committed to having a meaningful impact in the communities where our customers and employees live and work, and the Loan Fund is the latest Spectrum Community Impact program designed to do just that,” Charter chairman and CEO Tom Rutledge said in a press release. “Through these investments in local small businesses, Charter will positively impact financially underserved communities by providing growth capital, creating new jobs and strengthening businesses.”
During the first half of 2020, the Spectrum Community Investment Loan Fund will invest $1 million in Pursuit Community Finance (formerly known as the Excelsior Growth Fund) in New York, and $1 million in PeopleFund, a CDFI based in Texas. The Loan Fund also expects to invest $1 million in an Ohio-based CDFI later this year. By the end of the first quarter in 2021, the Loan Fund program plans to invest an additional $4 million, collectively, in selected CDFIs in California, Florida, North Carolina and Wisconsin. The initial $7 million investments will be in states comprising 70% of Charter’s more than 29 million customers.
“Pursuit welcomes the Charter investment, which will help catalyze responsible lending to neighborhood small businesses in communities throughout New York State,” said Pursuit Community Finance president Steve Cohen in a press release. “It is noteworthy to have a public company express a commitment to community lending alongside our more typical bank investors.”
Charter said it hopes its $10 million commitment will serve as an anchor investment that will lead to additional third party commitments for the small business community. The cable operator said its $3 million phase one investment in New York, Texas and Ohio is expected to be combined with more than $12 million in total capital from other sources and lead to the creation of hundreds of new jobs in underserved communities throughout those states.
“It is a true honor for PeopleFund being selected by Charter to be part of this initiative and we applaud their commitment in support of CDFIs to help our most vulnerable communities,” said Gustavo Lasala, president and CEO of PeopleFund. “Each dollar that Charter invests in a CDFI has a multiplier effect. We will leverage each dollar from Charter with four dollars from other sources for a grand total of $5 million to be invested in small businesses throughout Texas. This will have an enormous positive economic impact in the communities where these businesses operate by creating hundreds of jobs and helping hundreds of families achieve financial stability and independence.”