Enterprise Community Loan Fund created the Enterprise Community Impact Note in 2010 with the goal of raising $50 million from impact investors. By systematically addressing both technical securities issues and CDFI marketing barriers that were originally identified by the Triple Bottom Line Collaborative, Enterprise is paving the way for CDFIs to reach impact investors at scale.
Product details: The minimum investment in the Community Impact Note is $5,000, and interest rates range from 1.5 to 3.5 percent, depending on the investor’s term. Enterprise Community Partners, Enterprise Community Loan Fund’s parent company, guarantees all investments. As a nonprofit issuer, Enterprise Community Loan Fund is exempt from SEC registration. However, the security still must comply with widely varying state “blue sky” requirements for exempt offerings in each of the 25 states where the note is offered.
Costs: One-time development costs for the product were mainly legal services to develop the offering and correctly register it under various state rules. Ongoing program costs include: (1) a full-time employee and travel costs for national marketing; (2) investor administration (account transactions and communications regarding compliance and impact reporting); and (3) legal services to update and maintain compliance and registration in all states where the note is offered.
Results: Enterprise has raised $13.5 million through the note since 2010. Investment sizes range from $5,000 to $3 million, with investors as varied as students, family offices, community foundations, and Enterprise’s local project-based development partners. In a recent breakthrough, the broker-dealer Financial West Group and its affiliated network, Progressive Asset Management Group, began distribution of the note. As a result, wealth advisors now offer the Enterprise Community Impact Note to mainstream investors, a channel that has brought new capital to affordable housing developments across the country.