Citi backs fund aimed at small businesses

Citi and Enterprise Community Loan Fund team up with Next Street on growth financing

New York – Citi Community Capital and Enterprise Community Loan Fund announced today they are investing a combined $30 million in the new Next Street Opportunity Fund aimed at igniting small business growth and hiring in New York City and Boston. The investing partners view the new fund as a prototype for potential expansion and roll-out to other cities.

The initiative combines growth financing with the sophisticated expertise business owners need to expand in a tough environment. "Management expertise is as critical as capital in getting a company to the next level," says Next Street President Ronald L. Walker, II. "We're bringing a Fortune 500 skillset to urban small business."

Next Street delivers financing and strategic advice to companies with annual revenues of $5 million to $60 million that are already significant employers in urban markets. The Opportunity Fund will support business owners in low- and moderate-income communities with strategic planning, organizational development and marketing services. Using the firm's advisory services is a requirement for access to the fund.

"We are proud to invest in the Next Street Opportunity Fund and show our deep commitment to supporting small businesses," said Vikram Pandit, Chief Executive Officer of Citigroup. "Helping small companies grow and create jobs strengthens our communities and is critical to the economic recovery. Partnering with Enterprise, we hope the initiative can become a model and expand to cities across the country."

In September 2011, Citi announced a commitment of $24 billion in lending over three years: $7 billion in 2011, $8 billion in 2012 and $9 billion in 2013. In January of 2012, Citi announced it had surpassed its 2011 commitment by more than $900 million, for a total of $7.9 billion. Citi selected Next Street for the firm's unique track record in helping small companies grow.

Data from the Boston-based research organization Initiative for a Competitive Inner City show that the most successful urban CEOs have powerful ties to their communities. Preserving local ownership and expanding job growth are objectives for the fund.

The local nature of the fund was one of many reasons Enterprise found the fund attractive. "Enterprise helps to create healthy, thriving communities," says Lori Chatman Enterprise Community Loan Fund President. "With the Next Street Opportunity Fund, we're looking forward to working with Citi and Next Street to provide greater access to employment opportunities and to increase investment in urban markets, both necessary components for successful neighborhoods."

Next Street serves as a strategic advisor to the business owner, much like a private equity firm would for their investees, but growth financing is in the form of a loan, rather than a majority stake of the company. This makes the Next Street model more attractive than private equity to family-owned firms.

Next Street founder Tim Ferguson describes the firm as a merchant bank for the urban enterprise. "We can make credit decisions based on a company's potential, not just its history, because we're inside the business working with the owner and her team helping them realize that potential."

Citi, Enterprise, and Next Street expect that growth capital will begin flowing to high-potential small companies this year.

Citi

Citi, the leading global financial services company, has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions. Citi provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, transaction services, and wealth management.

Citi Community Capital

Citi Community Capital (CCC) is a premier financial partner with nationally recognized expertise in financing all types of affordable housing and community reinvestment projects. CCC's origination, structuring, asset and risk management staff across the country provides creative financing solutions designed to meet their clients' needs. CCC helps community development financial institutions, real estate developers, national intermediaries and nonprofit organizations achieve their goals through a broad, integrated platform of debt and equity offerings. Additional information may be found at www.citicommunitycapital.com.

The Next Street Opportunity Fund

The new fund will provide loans up to $2 million to companies with annual revenues of $3 million to $60 million, operating in low- to moderate-income areas of the Boston and New York markets. Borrowers must have a strong management team and at least 5 to 7 years of successful operations. The fund will provide a mix of senior secured term loans and senior structured loans, with collateral and debt service coverage ratios based on both historical and projected financial performance. For details, including specific markets, visit www.nextstreet.com/opportunity_fund.

Next Street

Next Street was founded in 2005 on the idea of providing growing companies in urban markets with the same level of expertise that investment banks, Madison Avenue, and the elite consultancies provide to Fortune 500 companies. Next Street portfolio companies now generate $600 million in annual revenues and employ over 4,000 people. Most are located in low-income areas. Two thirds are women- or minority-owned businesses. One third are nonprofit organizations. The firm has worked with over 100 small businesses to date. To learn more about the firm's clients, partners and capabilities, please visit www.nextstreet.com.

Enterprise

Enterprise is a leading provider of the development capital and expertise it takes to create decent, affordable homes and rebuild communities. For 30 years, Enterprise has introduced neighborhood solutions through public-private partnerships with financial institutions, governments, community organizations and others that share our vision. Enterprise has raised and invested more than $11 billion in equity, grants and loans to help build or preserve nearly 300,000 affordable rental and for-sale homes to create vital communities. Visit www.EnterpriseCommunity.org and www.EnterpriseCommunity.com to learn more about Enterprise's efforts to build communities and opportunity.