Momentus Securities, an investment bank with a social purpose, and RBC Global Asset Management (“RBC GAM”), today announced the launch of an  SMA impact investment initiative that supports underserved communities across the United States.

The SMA initiative makes it easier to invest specifically in pools of government-guaranteed small-business loans made to small business owners operating in underserved communities across the United States. Additionally, the initiative will help create more liquidity for mission-driven lenders such as Community Development Financial Institutions (CDFIs), Community Development Corporations (CDCs), Minority Depository Institutions (MDIs), and community banks.

Momentus Securities is an SEC-registered broker-dealer, FINRA/MSRB/SIPC member, and an approved SBA 7(a) loan pool assembler. It will leverage its expertise in sourcing loans from smaller loan originators and enhance liquidity for mission-driven lenders, who will be able to sell loans on the secondary market and replenish their capital consistently. Placing these loans on the secondary market removes them from lenders’ balance sheets, allowing them to offer more loans to small businesses and support the communities they serve, amplifying their mission.

RBC GAM’s BlueBay Fixed Income platform has a 26-year track record of managing impact investments in the U.S., with extensive experience purchasing small business loans in underserved communities and managing these government-backed assets. Much of this work has been accomplished alongside mission-driven lenders in order to make the most impactful investments to neighborhoods and communities. Through these existing investments, BlueBay Fixed Income has found that many clients are interested in furthering their impact through the purchase of loans originated by mission-driven lenders, recognizing the role these institutions play in their communities. Additional interest for investing in small businesses has resulted from incentives for banks contained in regulations under the Community Reinvestment Act.

“Our mission is to drive positive social change by connecting institutional investors to community lenders, creating greater access to capital for underserved communities,” said Jaime Aldama, President of Momentus Securities. “We are thrilled to work with RBC Global Asset Management’s BlueBay Fixed Income team on this innovative initiative, which allows us to leverage our market expertise and community reach to make a significant impact.”

“The relationship between Momentus Securities and RBC GAM’s impact investment team provides mission-driven capital constrained lenders such as CDFIs, CDCs, credit unions and community banks with an efficient and reliable access to the secondary market,” said Ron Homer, Chief Strategist of U.S. Impact Investing at RBC Global Asset Management. “This expanded access can boost lending capacity, leading to more loans and better terms for borrowers in underserved communities. We are excited to work with Momentus Securities to bring this initiative to life and create a market-driven impact investment opportunity for investors.”

Mission-driven lenders often seek to sell their loan portfolio in order to recycle their capital and free up their balance sheets, according to Rohan Kalbag, interim chief executive officer of Main Street Launch, a nonprofit CDFI in Oakland whose loans were sold into the SMA impact investing initiative.

“The innovative approach from Momentus Securities means that we have been able to get a better premium,” said Mr. Kalbag. “We can recycle these additional returns into providing more loans to our borrowers and creating an even greater impact.”

All investing involves risks, including possible loss of the principal amount invested. Small-business loans are subject to interest rate, price, and credit risks. Prices tend to be inversely affected by changes in interest rates. Typically, when interest rates rise, there is a corresponding decline in the market value of the loans. Small business loans are also subject to prepayment risk i.e., the risk that in a declining interest rate environment, borrowers may pay principal more quickly than expected.

About Momentus Securities:

Momentus Securities, an SEC-registered broker-dealer and FINRA/MSRB/SIPC member, offers a range of financial products and services to support its mission of connecting mainstream capital sources and impactful investment opportunities. These services include debt and equity capital raising, asset-backed and structured finance as well as corporate finance and advisory services, and will be offered across five key segments: Affordable Housing, Healthcare, Education, Small Businesses and Food. Momentus Securities seeks to bolster the mission-driven investing space by addressing the current scale and liquidity limitations in the sector that inhibit the deployment of institutional capital.

Momentus Securities is part of the Momentus Capital branded family of organizations, which also include, among other organizations, Capital Impact Partners (a nonprofit Community Development Financial Institution, or CDFI) and CDC Small Business Finance (a leading SBA Community Advantage Small Business Lending Company, or CA SBLC).

About RBC Global Asset Management:

RBC Global Asset Management is the asset management division of Royal Bank of Canada (RBC) and includes money managers BlueBay and Phillips, Hager & North Investment Management. RBC Global Asset Management is a provider of global investment management services and solutions to institutional, high-net-worth and individual investors through separate accounts, pooled funds, mutual funds, hedge funds, exchange-traded funds and specialty investment strategies. The RBC Global Asset Management group of companies manage more than $453 billion USD in assets and have approximately 1,600 employees located across Canada, the United States, Europe and Asia.

RBC GAM is the asset management division of Royal Bank of Canada (RBC) which includes RBC Global Asset Management Inc., RBC Global Asset Management (U.S.) Inc., RBC Global Asset Management (UK) Limited, RBC Global Asset Management (Asia) Limited and RBC Indigo Asset Management Inc., which are separate, but affiliated subsidiaries of RBC.

Opinions contained herein reflect the judgment and thought leadership of RBC GAM and are subject to change at any time. Such opinions are for informational purposes only and are not intended to be investment or financial advice and should not be relied or acted upon for providing such advice. RBC GAM does not undertake any obligation or responsibility to update such opinions.”

RBC GAM reserves the right at any time and without notice to change, amend or cease publication of this information.