Friends & Family Fund

Berkshire Bank is proud to partner with The Runway Project to create the Friends & Family Fund aimed at helping entrepreneurs of color access the seed capital they need in order to launch the businesses of their dreams.

Together, we are doing our part to help close the racial wealth gap by investing in communities of color.

About The Runway Project
The Runway Project is a national initiative solving the ‘Friends & Family’ seed funding gap for minority entrepreneurs by providing early stage funding options and holistic business support as a wealth-building strategy.
  • On average, friends and family invest $60 billion a year into early-stage businesses. The average amount of capital required to start a business is $30,000.
  • African Americans are starting businesses at a rate that outpaces the majority. In the U.S., black women in particular, are the fastest growing segment of entrepreneurs.
  • Yet, there are still significant barriers to accessing seed capital in addition to a staggering racial wealth gap. (African American median household wealth is $11,000 compared to $141,900 of White American median household wealth).
Click here to read some FAQ's
 
 

PRODUCT FEATURES

SPECIALTY CERTIFICATE OF DEPOSIT CREATED

Holistic, culturally relevant business support to minority entrepreneurs.
  RELATIONSHIP-BASED UNDERWRITING

Eliminates the historical barriers such as over reliance on credit score, track record, personal collateral or historical tax and financial reporting as an indicator for future success.
  ONE-ON-ONE
BUSINESS ADVISING


By providing a trusted advisor who the business owners feel safe sharing their financial issues, we can work through solutions to keep their loan payments on track.
  COMMUNITY BUILDING

Monthly circles & retreats that center on wellness and self-care, healing, and activism build social cohesion and resiliency which reduces the
default risk.
 
INVESTMENT CRITERIA    “WE BELIEVE IN YOU” MONEY   FRIENDS-AND-FAMILY-TYPE SUPPORT
  • Minority-owned businesses
  • Start-up or early growth stage
  • Industry agnostic
 
  • $5,000–$20,000 loans
  • 3–5 year terms
  • 4% annual interest rate
  • 18–24 month interest-only period
  • Flexible and supportive underwriting criteria
 
  • Value-add underwriting process
  • High-touch support; weekly one-on-one support
  • Monthly Peer Coaching
  • Access to networks and business resources
  • Value-add underwriting process
  • High-touch support; weekly one-on-one support
  • Monthly Peer Coaching
  • Access to networks and business resources

At Berkshire we are launching a new CD/ Loan product with The Runway Project to support underserved small businesses. This will allow for community investment in a place-based, risk-free CD product while building the capacity of the local ecosystem for community capital and business support.


Frequently Asked Questions

What is the ‘Friends & Family’ Loan Fund?
Berkshire’s Friends & Family Fund is a new loan fund designed to help entrepreneurs of color access the seed capital they need in order to launch the businesses of their dreams and spur economic growth in underserved communities. The fund’s key feature is our new Certificate of Deposit that allows depositors to enjoy a market-based rate of return on their investment while also while providing liquidity for the loans. The fund is one of the first offerings under Berkshire’s new Be First initiative, the bank’s social impact strategy.
 
Who should invest in the ‘Friends & Family’ CD?
Everyone! When you deposit your money in Berkshire’s ‘Friends & Family’ CD your dollars will work for you and the community. You can be proud knowing that your deposit provides a double-bottom line return on investment. By participating in this CD you’re helping to seed minority-owned businesses that otherwise would not have access to critical start-up capital.
 
Why is Berkshire creating a Fund to support entrepreneurs of color?
There is no shortage of great business ideas within communities of color, but what they have historically lacked is the access to capital to launch their businesses. For example, the most common funding path for burgeoning business owners begins with asks of support from family and friends but a clear racial wealth gap exists that limits Black entrepreneurs in particular from accessing significant funding—white households in the United States have a median household wealth of $142K while Black households have a mere $11K in wealth. The racial wealth gap is structural and pervasive, and the lack of access to capital is a key barrier to entrepreneurship and economic growth in communities of color. Berkshire is proud to launch a fund aimed at helping to close this racial wealth gap.
 
Who is The Runway Project and how do they “power” the Fund?
The Runway Project is a national initiative founded by Jessica Norwood that is solving the ‘Friends & Family’ seed funding gap for entrepreneurs of color by providing early stage funding options and holistic business to promising minority-owned businesses. Their innovative model was launched in Oakland in 2017 and Berkshire is proud to partner with them to administer the ‘Friends & Family’ fund here in Boston. The Runway Project leads the design and implementation of Berkshire’s ‘Friends & Family’ CD and loan program. This includes convening and managing the community-based underwriting process and training and providing ongoing support to the entrepreneurs who receive loans from the fund. Learn more about The Runway Project here.

How does the Fund work?
  • The fund is fueled by a specialty Certificate of Deposit that provides a safe, FDIC depositors’ insured market-rate return on investment, while providing liquidity for the loans.
  • Loan applications will be reviewed through a relationship-based underwriting process designed to eliminate historical barriers like an over reliance on credit scores, personal collateral, or historical tax and financial reporting as an indicator of futures success.
  • Trusted advisors provide holistic business support and ongoing financial coaching to entrepreneurs as they build their companies.
What is relationship-based loan underwriting?
The racial wealth gap creates a stark disparity in seed funding available for entrepreneurs of color, and traditional underwriting processes often perpetuate the lack of funding because they rely on approval criteria that falsely assumes these businesses have access to the same relationships and resources as their peers. Relationship-based loan underwriting considers the businesses “value add” versus their existing value, which is generally negligible at the start-up stage. It also eliminates historical barriers like an over reliance on credit scores, personal collateral, or historical tax and financial reporting as an indicator of futures success that often block entrepreneurs of color from accessing loans and traditional banking services, and takes into account a holistic assessment of potential borrowers including their business plans and market potential. Additionally, the loan program includes ongoing business support to provide entrepreneurs with training and business advice to help ensure their success, and fosters community networks that provide additional supportive relationships.
 
How can I open a ‘Friends & Family’ certificate of deposit?
If you are interested in connecting with Berkshire Bank to learn more about opening a certificate of deposit, please contact Robert Torres at Ratorres@berkshirebank.com.
 
What are the ‘Friends & Family’ loan eligibility requirements and terms?
Our loan terms are designed to mirror and replicate true “friends and family” funding, which is often extended as a convertible note at sub-six percent interest rates with no credit review and no collateral consideration. Early stage funding is essentially “we believe in you” money, and Berkshire’s ‘Friends & Family’ loan duplicates this by offering low-interest loans with high-touch support to entrepreneurs of color.
 
How can I apply for a loan for my small minority-owned business?  
 If you are a minority-owned businesses interested in learning more about the ‘Friends & Family’ loan program, contact Jessica Norwood of the Runway Project at jessica@therunwayproject.org.

 

Subject to credit approval. Offer may change without notice and available to The Runway Project clients.

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