Swansea-based BayCoast Bank has joined Boston Children’s Hospital and the Dana-Farber Cancer Institute to fund an initiative that will invest in businesses owned by Black, Latino and Indigenous entrepreneurs and other people of color.

The organizations have invested $1 million in a capital growth fund administered by Local Initiatives Support Corp. (LISC). LISC said in a statement yesterday that its Massachusetts Small Business Growth Fund would “provide flexible equity-like capital akin to the ‘friends and family’ capital that often seeds the growth of small businesses, but is often out of reach to people of color.”

Entrepreneurs of color in Massachusetts have unmet capital needs estimated at approximately $574 million annually, LISC said.

“LISC’s entrepreneur-friendly Small Business Growth Fund is critically needed to support business growth, job creation and wealth building by Black and Brown businesses,” LISC Boston Executive Director Karen Kelleher said in the statement. “The investments announced [Tuesday] by Boston Children’s Hospital, BayCoast Bank and Dana Farber Cancer Institute will help us move the dial on capital access for entrepreneurs of color in Massachusetts.”

Growth capital gives business owners time to invest in and stabilize their companies, and repayment will not be required until businesses have successfully grown their revenue and met agreed-upon growth targets, the statement said.

LISC said it would invest in businesses that have revenues between $250,000 and $3 million, have operated for at least two years, and have the ability to deploy capital for business improvement and growth. Investments will likely range from $50,000 to $250,000, with the investment amount based on revenue potential. LISC said businesses located in economically disadvantaged communities will be preferred.

Half of the funds have been designated for businesses on the South Coast, including in Fall River and New Bedford. When LISC proposed the Growth Capital Fund to BayCoast, the statement said, the bank agreed to invest in the fund and requested that it benefit entrepreneurs in the bank’s market on the South Coast of Massachusetts. The two organizations had started working together in 2020 to help entrepreneurs of color access Paycheck Protection Program loans.

“BayCoast’s contribution to LISC’s Massachusetts Growth Capital Fund, is an extension of our deep belief that the diverse people and businesses of the South Coast are our best investment,” Nick Christ, BayCoast Bank’s president and CEO, said in the statement.

LISC said it has started recruiting candidates for investment.