Providing COVID-19 Redress for Minority-Owned Businesses

Holland & Knight's commercial lending and banking attorneys provided pro bono representation to The Boston Foundation (TBF) to help launch its Business Equity Fund, which provides alternative financing and access to capital for black and Latinx-owned businesses in eastern Massachusetts, southern New Hampshire and northern Rhode Island.

In response to the coronavirus pandemic, our taxation and corporate services attorneys also assisted in the formation of the Business Equity COVID-19 Emergency Fund (BECEF), which supports black and Latinx-owned businesses in Massachusetts that are particularly vulnerable to the financial hardships resulting from the crisis.

The Business Equity Fund, created in 2018, provides alternative financing and access to capital for qualified businesses owned by minorities that have been constrained by conventional financing practices. Our business law attorneys drafted the template loan documents pursuant to which TBF provides capital to eligible companies. The fund works alongside Eastern Bank's Business Equity Initiative (BEI) and the Greater Boston Chamber of Commerce's (GBCC) Pacesetters Initiative, forming an ecosystem approach.

The Business Equity Fund is designed to provide both flexible financing and patient capital that produces a modest return so, ultimately, it can be self-perpetuating. With a $2 million initial investment from Eastern Bank, the goal is to grow the fund going forward and create an evergreen loan fund for eligible ventures. Additionally, the businesses are carefully vetted and matched with a strategic advisor – an experienced business executive who helps them develop and implement a strategic growth plan.

Since the program's inception, Holland & Knight's venture capital and emerging companies attorneys have assisted with documenting five loans in amounts ranging from $250,000 to $400,000. With the onset of the COVID-19 pandemic and its economic impact, our attorneys also helped put in place forbearance documents with the five borrowers, delaying the accrual of interest and payment obligations for 12 months.

Regarding BECEF, Holland & Knight's financial services attorneys developed and implemented the loan documents, as well as assisted with high-level diligence on the borrowers. So far, our attorneys have helped approximately 30 Boston-area businesses receive interest-free loans of between $10,000 and $65,000 from the COVID-19 emergency fund for an aggregate loan amount of almost $1 million.

Holland & Knight has established a COVID-19 Response Team to help clients, organizations and companies respond to a variety of business and legal issues they may be facing related to the coronavirus pandemic. In addition to legal analysis of the CARES Act, State and Local Orders summaries and more than 400 timely publications, this centralized hub offers curated topics of interest that may be valuable to your business or group. For more information about the Business Equity Fund, BECEF or how to apply, please contact the attorneys associated with this case study.

DISCLAIMER: Please note that the situation surrounding COVID-19 is evolving and that the subject matter discussed in these publications may change on a daily basis. Please contact your responsible Holland & Knight lawyer or the author of this alert for timely advice.