The TILT Forward Initiative (TFI) is a national, strategic initiative of AEO to develop and launch scalable product, capital and marketing solutions for CDFIs and community lenders.
How is AEO helping entrepreneurs on Main Street?
Entrepreneurs on Main Street have long struggled to locate or qualify for the loan products and business services that can help their businesses grow. Fortunately, CDFIs and nonprofit lenders are often able to help these entrepreneurs when many other doors are closed. That’s the good news. The less good news is that these community organizations are usually operating at maximum capacity. How much more of an impact could these lending institutions and entrepreneurs achieve if they had access to more resources, more money, more time? AEO saw an opportunity in that question and set out to find an innovative, scalable solution. That solution? DreamFund.
What is DreamFund?
DreamFund is a nonprofit shared utility that enables CDFIs and other community and nonprofit lenders across the country to access products for small and micro businesses from third-party sources. Participating lenders will be able to offer these products to qualified borrowers at prices well-below market rates.
DreamFund originates and purchases qualified loans, and performs the finance function for the TILT Forward Initiative. DreamFund presents funders with a structure that limits investor risk (and diligence) to the prospective performance of the loan products that a funder supports. At the same time, DreamFund is designed to distribute capital and philanthropic support to participating mission-focused lenders. Funders will be able to target specific geographies, specific mission-focused lenders and/or specific business owner characteristics (e.g. women, veterans).
AEO has partnered with a world-class manager with more than a decade of experience at Goldman Sachs, Citi and other leading financial institutions to launch and manage DreamFund. We are launching with an initial investment of $500,000 from Capital One and AEO to prove the model. The first loan is expected to close using DreamFund in the second quarter of 2015, and then we have plans to on-board the next wave of CDFIs by the end of this calendar year. DreamFund is expected to spinout into an independent 501(c)3 as soon as possible.
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