Loan Agreement to Benefit Marginalized Populations in South Africa

New York restructuring partner Lorraine McGowen and New York law clerk Zanele Moloi represented long-standing social sector client, Calvert Foundation, in connection with a loan made to  Shared Interest Inc. (“SI”), a 17-year old US-based non-profit organization that guarantees loans made by South African banks to local community development financial institutions (“CDFIs”) and cooperatives serving marginalized populations with limited access to credit.  SI has a large and varied funder base, raising funds in the US by issuing promissory notes to individuals and organizations--in particular African-American religious organizations and the socially responsible investment community. SI invests the loan proceeds in US Government agency securities and highly rates bank bonds to collateralize Citibank standby letters of credit (“LOCs”).  These letters of credit serve as guarantees to South African banks that lend to CDFIs, MFIs or agricultural cooperatives.  These borrowers are approved by SI’s South African partner, the Thembani International Guarantee Fund.  A primary goal of the program is to encourage banks to enter the downscale market.  The proceeds of Calvert Foundation’s loan will be used to collateralize Citibank’s LOCs.