Lafayette Square, an impact investment platform, announced that its affiliates have entered into a new credit facility with Sumitomo Mitsui Banking Corporation ("SMBC"). The facility will be used to support Lafayette Square's regionally focused middle market lending activities, consistent with its mission to achieve impact in local communities. The credit facility will initially provide the Lafayette Square affiliates with the ability to borrow up to $10.6 million based upon unused capital commitments from their investors, and is expected to grow through an uncommitted accordion feature expandable up to $1 billion. The annual interest rate applicable to borrowings under the facility will be based on a range of alternative rates, including applicable SOFR plus a margin of 1.8%, and the facility matures in January 2024.
The facility includes an innovative ESG pricing adjustment structure highlighting Lafayette Square's impact-focused investment approach. Through reduced borrowing costs, the proceeds will be used for investments in businesses located in underserved communities, that are significant employers of low- or moderate-income individuals, are non-sponsored entities, that are engaged with Lafayette Square's impact service providers, or that are considered community development and public welfare investments by banking regulators.
"This innovative credit facility supports our core impact strategy, which combines capital and services to drive positive outcomes to the local communities in which we invest," said Andy Phelps, Managing Director and the Head of Capital Markets at Lafayette Square. "We are proud to partner with SMBC to scale our direct lending activities and appreciate their commitment to the Lafayette Square vision of a more inclusive economy."
"We are proud to partner with Lafayette Square to support their efforts to reach underserved borrowers and communities," said Aaron Franklin, Head of Sustainable Finance and Advisory Group at SMBC Americas Division. "This partnership is a good example of SMBC's commitment to support our clients in promoting and creating positive social and economic change."