Chapter 2B. Equitable Impact Assistance for Local Businesses.

§ 2–281.01. Definitions.

For the purposes of this chapter, the term:

(1) "Economically disadvantaged individual" shall have the same meaning as set forth in § 2-218.02(7).

(2)(A) "Eligible business" means an equity impact enterprise or an entity that would qualify as an equity impact enterprise that has $2 million or less in annual revenue and certifies in writing that the business is unable to obtain conventional financing or is a business enterprise that cannot reasonably be expected to qualify for financing under the standards of commercial lending.

(B) For the purposes of this paragraph, the phrase "unable to obtain conventional financing" means that the business has attempted but failed in the attempt to obtain financing from conventional sources.

(3) "Equity impact enterprise" shall have the same meaning as set forth in § 2-218.02(8A).

(4) "Fund" means the Equity Impact Fund established in § 2-281.02.

(5) "Fund Manager" means a private financial organization selected by the Mayor pursuant to § 2-281.03.

(5A) "Investment", unless the context otherwise requires, means a grant, loan, credit enhancement, or other financial funding tool approved by the Mayor.

(6) "Private financial organization" means a partnership, corporation, trust, limited liability company, Community Development Financial Institution, or a consortium of partnerships, corporations, trusts, limited liability companies, or Community Development Financial Institutions, whether organized on a profit or not-for-profit basis, that has as its primary activity the investment of capital into businesses.

§ 2–281.02. Establishment of the Equity Impact Fund.

(a)(1) The Mayor shall select one or more Fund Managers to manage a fund outside the District of Columbia government to be known as the Equity Impact Fund ("Fund").

(2) The selected Fund Managers shall have completed at least one round of prior funding in an amount greater than or equal to the amount of the District's initial grant.

(3) The Deputy Mayor for Planning and Economic Development ("Deputy Mayor") shall provide, upon selection of the Fund Manager, the District's initial grant to the Fund Manager for deposit into the Fund ("District's initial investment").

(4) Notwithstanding § 1-328.13, the Deputy Mayor may make subsequent grants to the Fund Manager for deposit into the Fund.

(b) The Fund shall be used to:

(1) Facilitate investment in eligible businesses that lack access to capital; and

(2) Make investments into eligible businesses based on a strategy determined by the Fund Managers.

§ 2–281.03. Fund Manager selection.

(a) The Mayor shall solicit applications, in a form determined by the Mayor, for the position of Fund Manager from private financial organizations. The application shall contain a description of:

(1) The applicant's qualifications, which shall include 5 or more years of demonstrable experience investing in:

(A) Small businesses;

(B) Businesses owned by economically disadvantaged individuals;

(C) Businesses owned by individuals who have been subjected to racial or ethnic prejudice or cultural bias because of their identity as a member of a group without regard to their individual qualities;

(D) Businesses that otherwise meet the definition of, or are similar to, an equity impact enterprise; or

(E) District-based businesses.

(2) How the applicant will structure the Fund and investment criteria to achieve the goals and objectives of the Fund;

(3) The ability and plans of the applicant to provide or raise sufficient funds to provide matching contributions for the Fund;

(4) The ability of the applicant to maintain a sufficient fund balance to administer the Fund;

(5) The type of businesses to be targeted for priority investment from the Fund;

(6) A demonstrable ability to offer a variety of financing vehicles, including equity financing, revenue-based financing, royalty financing, and debt financing;

(7) The investment strategies the applicant will employ to achieve the goals and objectives of the Fund; and

(8) Other criteria that the Mayor considers necessary or appropriate.

(b) A Fund Manager shall be selected from among the applicants for the position based on a scoring rubric established by the Mayor; provided, that:

(1) A preference be given to applicants that:

(A) Have experience working with entrepreneurs in the District; and

(B)(i) Are at least 51% owned, operated, or controlled by economically disadvantaged individuals or individuals who have been subjected to racial or ethnic prejudice or cultural bias because of their identity as a member of a group without regard to their individual qualities; or

(ii) Are an equity impact enterprise; and

(2) If the applicant manages an existing investment fund, the existing fund not exceed $50,000,000 in total investments.

§ 2–281.04. Minimum requirements for investment.

(a) A Fund Manager shall source, underwrite, and monitor all investments placed pursuant to this chapter. Except as otherwise provided by this chapter, the Mayor shall not determine the recipient, amount, interest rate, or any other requirement related to an investment made pursuant to this chapter.

(b) The following requirements shall apply to any investment in an eligible business made from the Fund using the District's initial investment or interest earned on the initial investment:

(1) A Fund Manager shall begin accepting applications from eligible businesses seeking investment, on a rolling basis, within 30 days of being selected for the position by the Mayor.

(2) For [a] Fund Manager to provide an investment from the Fund, the eligible business must agree, in writing, to participate in technical assistance training.

(3)(A) A Fund Manager shall establish for each selected eligible business a 12-month individualized business plan.

(B) The individualized business plan shall include technical assistance, provided at no cost to the eligible business, which shall include education on the management and scale of a business through live training or guided recorded sessions.

(C) All eligible businesses that receive an investment from the Fund shall be required to participate in at least 3 months of technical-assistance training prior to receipt of an investment.

(D) Investments shall be distributed to the eligible business in installments based upon completion of specific milestones clearly described in the eligible business's individualized business plan.

§ 2–281.05. Reporting requirements.

A Fund Manager shall submit to the Mayor, on a quarterly basis, a report on the activities of the Fund. The report shall include, at a minimum:

(1) The aggregate amount of dollars invested in eligible businesses during the reporting period;

(2) The number of eligible businesses receiving an investment, including the name and business address for each;

(3) A copy of the individualized business plan for each eligible business, including a description of the technical assistance training provided; and

(4) The aggregate amount of funds in the Fund and a breakdown of the amount of the funds in the Fund used for each of the following, with each amount reported as a percentage of the aggregate amount of the Fund:

(A) The percentage used for technical training assistance;

(B) The percentage used for administration costs; and

§ 2–281.06. Recovery of District grant.

The Mayor shall reserve the right to recover the amount of the District's initial grant or any subsequent grant of funds to the Fund Manager for deposit into the Fund and may exercise this right if the Fund Manager does not, within a reasonable period, as determined by the Mayor, place investments into eligible businesses in an amount equal to the amount of the District's initial investment or any subsequent grant of funds to the Fund Manager for deposit into the Fund.