Since 1990 financial institutions looking to fulfill CRA requirements and make loans and equity investments in community organizations have chosen Boston Community Capital as a partner. Today, over 25 financial institutions choose BCC to invest in affordable housing, child care facilities, schools, community health centers, and the rehabilitation of urban commercial real estate.
In addition to our Loan Fund and SUN Initiative investment offerings, BCC offers financial institutions an equity equivalent (EQ2) product to assist in the capitalization of its affiliates.
Created by the Opportunity Finance Network, Citibank and the Comptroller of the Currency as a new form of equity for CDFIs, the EQ2 is highly subordinate, below market debt issued for an indeterminate term. EQ2s support CDFIs in two ways. First, the funds are available to be lent and invested in community development projects. Second, by their subordinated nature, EQ2s leverage additional senior debt from other investors. Banks that purchase EQ2s are allowed to receive CRA credit for a proportionate share of the CDFI’s entire lending activity that greatly enhances the CRA credit of the investment. In addition, banks may claim favorable accounting treatment for the EQ2. BCC was the first local CDFI in the country to sell EQ2s and, through our Loan Fund we sell EQ2 to assist in the capitalization of the BCLF.
The terms of the equity equivalents created by Boston Community Capital meet the regulatory requirements for EQ2s. They are issued by BCC’s subsidiary Boston Community Loan Fund (BCLF). The BCLF’s purposes are to provide direct loans to community based projects and to capitalize affiliated community based financial intermediaries.
EQ2s are subordinate to all other creditors of BCLF, and BCLF shall not be required to repay if any or all of such repayment should put the BCLF out of compliance with any senior creditors, including violation of permanent capital and liquidity requirements (or any such comparable requirements which may exist at the time of maturity.)
Contact Jessica Brooks at Boston Community Capital, (617) 427-3640 or firstname.lastname@example.org if you are interested.
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