million project, a developer typically needs $300,000 to $400,000 in equity. Without that capital – and without strong banking relationships – many wouldbe developers are effectively locked out of larger deals. “That’s where the Philadelphia Accelerator Fund comes in,” he explains. Seeded with $5 million each from Citizens Bank and Univest Bank, along with additional support from the city, the fund has grown to about $20 million and is designed to be leveraged at roughly ten to one. That means enabling around $200 million worth of projects in the city. The fund offers pre-construction loans that function effectively as equity, without putting undue weight on traditional markers like credit scores or past borrowing history. Projects are evaluated on their merits, with two key criteria: the developer is a small or disadvantaged operator looking to grow, and the project delivers at least 51 percent affordability. “Up until three years ago, there wasn’t a single 100 percent Black- or brown-owned development company in Philadelphia doing more than $10 million worth of work,” Rushdi says. “Today we’re at 23.These aren’t joint ventures where someone is just satisfying a minority participation quota. They are the true owners and landlords of these projects.” The financing comes at very favorable rates – often around five to five-and-a-half percent, which is lower than many construction loans and far cheaper than hard money.That differential is often enough to make or break a project’s feasibility and gives emerging developers the ability to step up from $500,000 jobs to $3–4 million projects. A FULL-CIRCLE MODEL: MENTORSHIP, EVENTS, AND POLICY The BIA’s efforts extend beyond finance.Through an affiliated group, the Urban Development Association (UDA), experienced developers volunteer their time to mentor minority and small developers, guiding them through the full project lifecycle – from acquiring public land and assembling a capital stack to building and leasing or selling finished units. Photo Credit: Albert Yee 26 BUSINESS VIEW MAGAZINE VOLUME 12, ISSUE 12
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