The New York-based investment bank will enable more small businesses to use the U.S. Small Business Administration's 504 Loan Program -- meant to provide long-term capital for commercial real estate investment and job creation and retention -- by collaborating with nonprofit organizations and community banks.
A total of $500 million in credit will be accessible to small-business owners, Morgan Stanley says.
The initiative, called the Morgan Stanley SBA 504 Program, will be available through the Community Reinvestment Fund, USA, a nonprofit corporation, and CDC Direct Capital, a subsidiary of CDC Small Business Finance. Each will work with participating banks to identify qualified borrowers.
Morgan Stanley plans to buy loans collateralized by commercial real estate and originated through the SBA loan program. CRF and CDC Direct Capital will work with banks across the country to facilitate mortgage sales to Morgan Stanley.
By providing liquidity to community banks that lend to small businesses, Morgan Stanley will enable participating financial institutions to limit credit exposure, reduce interest rate risk related to fixed-rate loans, retain more liquidity and make more SBA first-mortgage loans, it says.
Morgan Stanley hopes the program will allow cash-strapped small businesses to access the capital resources they need, reinvest in their businesses and create jobs, it says.
"Morgan Stanley is working with the public sector to maximize the impact of the dollars it allocates towards economic development," said Mike Mantle, senior adviser in Morgan Stanley's Global Sustainable Finance Group, in a statement. "We are pleased to work with these long-standing industry professionals to respond to this critical need identified by community development leaders."
Small-business owners interested in the program should contact their community or regional bank, Morgan Stanley says.
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