Program Related Investments

Bank of America invests in community development financial institutions that provide financing to underserved communities.

What are program related investments?

Bank of America invests in community development financial institutions (CDFI's)¹ that provide alternative financing to those who might not qualify for more traditional financing. We use these program related investment (PRIs), to provide capital to CDFIs to make markets stronger, encourage entrepreneurial businesses and seed opportunities for individuals and families to attain economic self-sufficiency. Through PRIs, we support business development, home ownership and economic growth, which strengthens the credit profiles of neighborhoods so that they can attract conventional private investment in the future.

Helping distressed communities

Bank of America makes PRIs and loans to community development credit unions, community development loan funds, and microenterprise loan funds that primarily serve low to moderate-income communities across our franchise. Our strategy is to target investments that benefit low- and moderate-income individuals and families, low- and moderate-income census tracts, and small businesses within those areas.

Program related investment guidelines²

Since 1996, Bank of America has offered products and services specifically structured to meet the unique needs of CDFIs. Applications and inquiries from depository CDFIs (regulated banks seeking equity) are referred to National Community Investment Fund, a separate and independent trust invested in by Bank of America and established to fund for-profit community development financial institutions. The following are guidelines for structuring program related investments, not inflexible rules:

• Purpose. Bank of America makes program related investments in CDFIs to fund loan programs for their customers. Requests for funds for any other purposes are not considered under this program. Requests for general operating support should be made through the Bank of America Foundation online application process.



• Term. Often the term will correspond to the term of loans made by the CDFI, or to match the long-term asset/liability plan of the CDFI. The maximum term is ten years. Revolving lines of credit are not available under this program.



• Amount. The amount of a PRI is determined principally by the CDFI's capacity to relend the PRI proceeds over a defined period of time and by the amount and concentration of the CDFI's funding from other sources. There is no minimum PRI amount. PRI proceeds may be fully advanced to the CDFI upon closing or may be drawn down over an appropriate period of time.



• Repayment. Interest payments should be made at least quarterly. Principal payments may be structured to amortize the PRI over the terms of the investment, to correspond to principal reductions on loans being funded, or based upon the projected needs and cash flow of the CDFI. Typically there is no prepayment penalty but prepaid principal is not eligible to be advanced again to the borrower.



• Collateral. Loans to CDFIs may be unsecured. The primary source of repayment is the overall cash flow from the entire CDFI asset base. General recourse to the borrowing organization is required.



• Pricing. Fixed below-market interest rates are often available. The CDFI (borrower) is responsible for closing costs, attorneys' fees and origination fees.



• Participation. Bank of America prefers that its own commitments be matched by commitments from other participating lenders and investors; particularly those knowledgeable about the market served by the CDFI. The requirement for and amounts of such participations will depend upon the size and policies of the participants as well as the size and nature of the request for funding and the composition and size of the borrower's loan pool. Bank of America generally seeks to fund no more than 30% of the Borrower's total loan pool (loans outstanding plus funds available to lend).

The PRI program is a loan program with finite resources. Due to the large number of requests and the requirement that PRIs be repaid, the underwriting process is comprehensive and competitive. Qualified organizations interested in applying for a Bank of America Program Related Investment should complete the eligibility quiz that is required in order to access the online application. Upon completion, your application will be reviewed and you will be contacted if additional information is required in order for us to consider your request.

Footnote Section

¹Footnote 1 The federal definition (used by the CDFI Fund) of a CDFI is an entity whose predominant business activity is the provision of loans or investments to promote community development. A federally defined CDFI also provides development services to the targeted low-income population or targeted distressed geographic area it serves.

²Footnote 1 These are general parameters. Loan or investment structure can vary, based on the type, nature and structure of the CDFI and projected community development impact that can be achieved through the relationship.