News shared with Impact Entrepreneur by Rachel Kent of Founders First Capital Partners

Founders First Capital Partners has raised $18.59 million for its Change Catalyst Fund II. The San Diego alternative credit firm, which finances service-based small businesses in underinvested communities, announced the close on October 6 and said its loan deployment had grown 46 percent in a year as more small businesses sought to refinance high-cost merchant cash advances.

A merchant cash advance, or MCA, gives a business fast cash against its future receivables and takes repayment through daily or weekly withdrawals. Effective rates often exceed 50 percent, according to Founders First. In June 2025 the U.S. Small Business Administration made such advances ineligible for refinancing with SBA 7(a) loans, which the firm says closed the primary traditional refinancing path for businesses carrying that debt.

Founders First says MCA refinancings now make up more than 61 percent of its loan fundings. It has refinanced the MCA debt of 33 borrowers so far, at an average of $175,000 each, and says the refinancing typically lowers a borrower’s effective APR by an average of 15 percentage points.

New investors and supporters include six family foundations, Community Reinvestment Fund, USA, and the Wells Fargo Foundation, whose support comes through Realize Impact, Founders First’s fiscal sponsor. They join existing investors including the Surdna Foundation, the Deutsche Bank Americas Foundation, Sunrise Banks, the Marguerite Casey Foundation and The Barra Foundation. The fund gives priority to seven regions: California, Illinois, Minnesota, New York, New Jersey, Pennsylvania and the DC/Maryland/Virginia region.

“Small businesses in underinvested communities are growing faster than the national average, but too many are held back by the cost of their capital,” said Kim Folsom, Founder, Chairperson and CEO of Founders First.

Sources: Founders First Capital Partners and the U.S. Small Business Administration (SOP 50 10 8). Image courtesy of Founders First Capital Partners.