- Bridge loans from the Open Road Alliance have offered a lifeline to social enterprises and nonprofits hurt by the COVID-19 pandemic.
- During economic crises, many lenders and investors cut back on funding projects, bolstering the need for bridge loans.
- Since the start of the pandemic in mid-March, the organization has received more than 1,500 inquiries for funding, up from 351 during all of 2019.
Some social enterprises pummeled by the COVID-19 pandemic have found a lifeline — bridge loans from the Open Road Alliance.
However, the private philanthropic initiative, which has provided funding to social enterprises and nonprofits since 2012, also needed to be proactive to deal with a flood of requests from potential borrowers since the coronavirus outbreak and the resulting actions taken to control its spread that sent the economy into recession.
“It’s been a deluge,” Caroline Bressan, a managing director who oversees Open Road’s investments, told Karma. “We’ve received more than 1,200 inquiries since mid-March, which is three times what we got in all of last year.”
Open Road had to change its screening and funding conditions to deal with the crisis. Since mid-March, they have made 13 loans and 27 grants, adding up to more than $5.5 million in disbursements, with loans accounting for about 71% of the total amount expended. This is the largest volume of deals and expenditures that Open Road has ever made.
The organization focuses on providing bridge loans and grants to organizations that encounter an unexpected cash crunch. And the need for The Open Road Impact Fund has been widespread — everything from eye banks and remote medical providers in the U.S. to fish farms in Kenya receiving loans to help them as cash flows dried up and trade flows had to be rerouted because of the coronavirus outbreak.
“We supported a large eye bank in the U.S.,” Bressan said. “They saw 98% of their income dry up suddenly, and we provided them with a $300,000 loan to help them for eight weeks.”
COVID-19 provided an opening for Kenya’s fish-farming industry. Chinese tilapia imports have long dominated the market, but health fears and trade bottlenecks have allowed for local farms to gain market share. Local fish producers, including Victory Farms, Kenya’s largest, needed funds to quickly scale-up production. Open Road is among the lenders that gave the industry a boost.
Donors have noticed and the pandemic has created increased interest in the impact fund.
“We’re looking to raise $40 million for the Open Road Impact Fund and have already received $13 million,” Bressan said.
Since the first close in March, the fund attracted three new investors and announced co-funding partnerships with two others. Blue Haven Initiative, one of the first family offices dedicated to impact investing, is one of the new investors. Blue Haven, founded by Liesel Pritzker Simmons and Ian Simmons, hasn’t disclosed the amount they invested.
“Our family office believes grants and bridge loans can be helpful when it comes to keeping impact on track,” Liesel Pritzker Simmons, also a Blue Haven principal, said in a statement. “Since Open Road Alliance already had a structure in place to help social enterprises, we were pleased to support them as part of our COVID-19 relief efforts.”
Open Road’s mandate isn’t to focus on a specific geographical area or sector. But the majority of the inquiries so far have been in North America and sub-Saharan Africa, and nearly half of the projects are in the health and education categories.
Their goal is to guarantee that innovative projects that address many of the world’s most pressing problems will continue without interruption, which Open Road hopes to accomplish by offering fast funding through bridge loans and grants.
“Incidentally, the need isn’t going away anytime soon,” Bressan said. “More emergency bridge financing is needed.”
Open Road since mid-March has made 27 grants. An earlier version of this story said 25.