Platform will make small-business loans more widely available in underserved U.S. communities

A new financial partnership is aiming to make access to impact investments more widely available through the secondary market, supporting underserved communities in the United States by taking development loans off lenders books to create the liquidity needed for additional investment.

Momentus Securities, an investment bank with a social purpose, and RBC Global Asset Management announced the launch of a separately managed account impact investment initiative designed to make it easier to invest in pools of government-guaranteed small-business loans made to owners operating in underserved communities.

Additionally, the initiative will help create more liquidity for mission-driven lenders such as community development financial institutions, community development corporations, minority depository institutions and community banks, the partners said in a press release detailing the initiative.

“Our mission is to drive positive social change by connecting institutional investors to community lenders, creating greater access to capital for underserved communities,” said Jaime Aldama, president of Momentus Securities.

Placing these loans on the secondary market removes them from lenders’ balance sheets, allowing them to offer more loans to small businesses and support the communities they serve, amplifying their mission.

“This expanded access can boost lending capacity, leading to more loans and better terms for borrowers in underserved communities,” said Ron Homer, chief strategist of U.S. impact investing at RBC Global Asset Management.

Mission-driven lenders often seek to sell their loan portfolio in order to recycle their capital and free up their balance sheets, according to Rohan Kalbag, interim chief executive officer of Main Street Launch, a nonprofit CDFI in Oakland whose loans were sold into the SMA impact investing initiative.

“The innovative approach from Momentus Securities means that we have been able to get a better premium,” said Kalbag said. “We can recycle these additional returns into providing more loans to our borrowers and creating an even greater impact.”

Momentus Securities is an SEC-registered broker-dealer and an approved SBA 7(a) loan pool assembler. It will leverage its expertise in sourcing loans from smaller loan originators and enhance liquidity for mission-driven lenders, who will be able to sell loans on the secondary market and replenish their capital consistently.

RBC’s BlueBay Fixed Income platform has a 26-year track record of managing impact investments in the U.S., with extensive experience purchasing small-business loans in underserved communities and managing these government-backed assets. Much of this work has been accomplished alongside mission-driven lenders in order to make the most impactful investments to neighborhoods and communities.

Through these existing investments, BlueBay Fixed Income has found that many clients are interested in furthering their impact through the purchase of loans originated by mission-driven lenders, recognizing the role these institutions play in their communities. Additional interest for investing in small businesses has resulted from incentives for banks contained in regulations under the Community Reinvestment Act.

Read more: Start in the Deep South to address social and economic inequity