Northeastern University, hoping to offset concerns that its expanding campus provides few benefits to its neighbors, is launching a unique lending program aimed at helping local businesses owned by women and minorities.
The private university will announce on Tuesday it is spending $2.5 million to help guarantee nearly $6.5 million in small business loans over the next two years. The loans will be provided with funding from Local Initiatives Support Corp. and Mass Growth Capital Corp., a state economic development organization, and can be used to help businesses expand and pay for equipment.
“An entrepreneurial ecosystem must embrace innovation and support those who are one opportunity away from turning ideas and hard work into prosperity,” Joseph E. Aoun, president of Northeastern, said in a statement.
The loan program is an outgrowth of an agreement the university signed with the City of Boston in 2015 when it outlined plans to expand academic facilities and upgrade student housing. During the university’s planning process, neighborhood groups had complained about Northeastern’s limited vendor contracts with minority-owned businesses.
Under this new program, vendors who work on Northeastern projects will be able to apply for a line of credit to help them complete university contracts. Women and minority-owned businesses in the neighborhoods around Northeastern will also be able to apply for loans of between $1,000 to $1 million, said Bob Van Meter, the executive director of Local Initiatives Support Boston, which is administering the loan program.
The loans range from three to 10 years with interest rates of up to 7 percent, which is below what’s available in the market, Van Meter said.
Local Initiatives Support will also help businesses navigate the bidding process for Northeastern contracts, he said.
The program marks the first time that the local initiatives group, which has primarily supported affordable housing and commercial development projects in Boston, expanded into small business lending.Deirdre Fernandes can be reached at email@example.com. Follow her on Twitter @fernandesglobe.