Philly Accelerator Fund creates loan program for minority-owned property developers

A new loan fund backed by the city is set to launch later this year to help traditionally disadvantaged developers build affordable housing in Philadelphia.

The Philadelphia Accelerator Fund aims to support minority and women-owned developers and nonprofit developers to create affordable housing and other projects, according to PAF's website. The fund plans to start making investments this summer.

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The city subsidized PAF with an investment of around $11 million to get things started. The fund is intended to circumvent the barriers that minority property developers face when applying for bank loans, WHYY reported. 

The group aims to raise another $30 million dollars by this fall, after which they can start offering loans and investment opportunities. In five years, they hope to raise more than $100 million and produce 6,000 affordable housing units.

Greg Heller, director of PAF and vice president of community investments at the Philadelphia Housing Development Corporation, said the fund is modeled after a similar program in San Francisco that offers loans to nonprofit affordable housing developers so they can compete with market-rate builders.

Heller said the idea to do something like it in Philly came after hearing that local developers were having trouble getting funding from banks and traditional sources of financing. Officials brought the idea up during the creation of the 2018 Housing Equity action plan.

The projects don't have to be for affordable housing alone, they just have to target below-market rate customers. For-sale home projects, multifamily rentals and subsidized housing are eligible to apply.

To be eligible for funding, projects can cater to people that earn up to 120% of the area's median income, totaling $73,000 annually.