In response to the COVID-19 pandemic, Congress created the Paycheck Protection Program (PPP) to stabilize businesses and their workers. Minority depository institutions (MDIs) – mission-driven lenders that serve marginalized communities – played a vital role in supporting small businesses through PPP lending. In this report, we document how MDIs outperformed non-MDI lenders in deploying PPP loans and loan dollars to minority and low-income communities.
Resource Category: Access to Capital
2023 CDFI Survey
Survey results have shown that demand for CDFIs’ products and services has continually grown for years. In the 2019 survey, almost three-quarters of respondents said demand had increased from 2018. An even larger share (86%) foresaw demand continuing to increase in 2020. Although CDFIs’ business slowed briefly at the onset of the pandemic, the 2020 COVID-19 CDFI Survey revealed that the resulting economic environment spurred many financially underserved individuals and businesses to seek banking or lending services, and demand for CDFIs quickly regained momentum. As demand for their products and services continued to grow, CDFIs expressed wanting to offer additional products and services. In the 2021 survey, 76% of respondents said they wanted to expand their offerings but could not on a sustained basis. Limited staffing was frequently reported as a top inhibitor to growth. Lending capital was the secondary issue.
Breaking Barriers to Capital Access for Returning Citizens
Endeavor Ready 3.0: Breaking Barriers to Capital Access for Returning Citizens report outlines actions that lenders and organizations in the reentry community can take to improve outcomes in their programs and remove barriers to capital access to better serve millions of returning citizens.
Access to Capital for Entrepreneurs: Removing Barriers
The Kauffman Foundation continues to recognize, with urgency, the significance of the role new and existing businesses play in local, regional, and the national economy. This report continues our series of sharing the state of capital access for entrepreneurs highlighting the need for innovative products and models to improve capital delivery systems.
Levels of Wealth Creation
Last fall, the ICA Fund team built the 5-year plan for organization towards achieving our mission to accelerate great businesses through mentoring and investments and close the racial and gender wealth gaps. Part of our strategy for this first year of our plan has been to test the effectiveness of our integrated advising and investment model on driving wealth creation in diverse communities. We partnered with an exceptional researcher, Lucy Odgie-Turley, from OT Consulting (OTC) to conduct this research. OTC led an extensive literature review, conducted qualitative interviews with our alumni, and surveyed local and state-level business owners.
Bank Types, Inclusivity, and PPP Lending During COVID-19
How do differences in bank or lending institution type shape access to credit for small businesses in poor and/or minority communities in the United States? Banking systems are populated by lenders that differ qualitatively in their organizational forms, business models and missions, and that connect—or fail to connect—to small business borrowers and local communities in divergent ways. The authors analyze data on the Paycheck Protection Program and its over 11 million loans made to businesses across the United States to trace how these differences shaped the flow of credit to poor and minority communities. The authors find substantial differences across seven lender types, both in their propensities to avoid or lend to firms in traditionally marginalized communities, and in how much they lend to poor and majority–minority communities relative to their nonpoor and majority White counterparts. From this variety within American banking, the authors identify two potential pathways for more inclusive lending.
Lending to Entrepreneurs of Color: Strategies & Tactics
In this paper, we share lessons in six key areas related to microloan origination, including specific practices of CDFIs that are currently originating many hundreds or thousands of microloans annually. The findings are drawn from the members of BOI’s Microfinance Impact Collaborative (MIC), which has been convening and collaborating since 2015 and whose members collectively originated 11,978 loans totaling just under $310 million in 2022. This paper follows a prior one that described the critical role that microloans — loans less than $50,000 — play in meeting the needs of Black and Latinx borrowers and the challenges that CDFIs face in scaling microlending.
Economic Wellness: Meeting Families Where They Are
In our new report, we examine the barriers low-income, BIPOC communities face in the US banking system. Based on data from nearly 900 participants in Southern California, the report looks at access to affordable banking options, trust and confidence in the banking system, existing community outreach programs, and it offers policy recommendations. CRC
Making CRA Relevant for a Changing Financial Services Industry
This paper examines shifts in the market share of banks and nonbank financial institutions in important product markets. Banks are covered by the Community Reinvestment Act (CRA) which requires them to serve all communities, including low- and moderate-income (LMI) ones. Nonbanks, in contrast, do not have this obligation. NCRC
California Communities’ Broadband Needs and the Role of Financial Institutions
For this report, the California Reinvestment Coalition (CRC) analyzed findings from multiple surveys of our varied constituents. First, we conducted a survey of 13 large national banks about their investments in broadband access and adoption initiatives. Second, in partnership with The Greenlining Institute, we conducted an annual survey of our members, who are local organizations