COVID-19 Resources ▸▸

Turning Innovation Into Enterprise


ARC Setting Up New Bank To Expand Lending For Small Businesses


The Appalachian Regional Commission (ARC) is creating a new central bank that will increase the availability of capital to small businesses in the 13-state Appalachian Region. Called Appalachian Community Capital (ACC), the ARC has committed to establishing this new source of funding for development lenders and will be capitalizing the ACC with $42 million over the next 24 months. This new central bank is expected to leverage $233 million in private bank capital and help create 2,200 jobs.

Appalachian Community Capital will raise grant capital and leveraged debt from funding sources not available to or underused by individual funds, such as regional and national banks, utilities, and national foundations. Because this new central bank will pool the capital needs of all its members, it can attract investors that are seeking to place larger amounts of money. The commission is establishing this new bank along with participating community loan fund partners in the Region, including Natural Capital Investment Fund in West Virginia.

“Natural Capital Investment Fund is proud to announce its partnership with the newly-established Appalachian Community Capital (ACC), a central bank dedicated to assisting the Appalachian economy by providing a ready source of funding for community development funds in the region,” said Marten Jenkins, President of Natural Capital Investment Fund. “As you may well be aware, entrepreneurs in our service area have trouble accessing adequate capital for their small businesses due to a variety of systemic barriers. As such, we are proud to be one of the 13 community development funds on the new bank’s board of directors that is working to change this status quo.”

“Industry analysis indicates that over the past several years, banks across the United States have instituted tighter credit requirements for small-business lending, reduced their appetite for risk, and become more sensitive to concentrated credit exposures. When combined with a challenging economic environment, these conditions have left many financially sound businesses seeking new sources of capital,” the ARC said in a recent press release. “For growing businesses in Appalachia, finding capital is even more difficult, as a number of systemic factors have limited the sources of available capital. According to recent studies, Appalachian small businesses receive only 82 percent of the loans of their comparable counterparts nationally, while businesses in Appalachia’s economically distressed counties receive less than 60 percent of the loans of their national counterparts.”

In addition to its lead investment in Appalachian Community Capital, ARC will contribute a range of resources to the bank’s development, including assistance with creation of a business plan, with formation of the entity as a not-for-profit organization, and with raising capital from bank and foundation investors.