Small business owners throughout the U.S. are still struggling to find the funding needed to thrive, especially women, minorities, and those in low-income communities. Many banks remain hesitant to take a chance on these owners, forcing them to turn to payday lenders, as a result.
Several community development financial institutions (CDFIs) are working to help small business owners combat predatory lending and secure responsible funding. One CDFI in New Mexico, Accion, has created a new product to address predatory merchant cash advance loans. Another, Carolina Small Business Development Fund, in Raleigh, North Carolina, has transformed its business model to effectively reach women and entrepreneurs of color.
Opportunity Finance Network, Goldman Sachs, and the Surdna Foundation will award four CDFIs, including Accion and CSBDF, with the 2016 Small Business Leader Award for Mission-Driven Lenders.
Mission-Driven Small Business Lenders
The SBLA, now in its third year, recognizes and rewards a group of small business lenders, who have worked together over the past two years to develop and implement ambitious growth plans for small business lending.
“Helping small businesses thrive is an important objective of our 10,000 Small Businesses program, and we are proud to recognize lenders that share in that mission,” said Esta E. Stecher, chair of the Board of Directors of Goldman Sachs Bank USA, in a press statement. “Each of this year’s winning CDFIs is going above and beyond to provide capital to small businesses that may have difficulty accessing funding to spur growth and create jobs.”
Models of Small Business Lending Success
The awardees are part of a cohort of 24 mission-driven lenders in the Small Business Finance Collaborative, who grew and learned from each other, and they have continued to create opportunity and momentum in the small business space,” added Francis A. Lutz, interim CEO at OFN. “They are proving that providing responsible capital can be a successful business model for all lenders.”
The Accion U.S. network (part of Accion International) is a nonprofit that started in Brooklyn, NY, but it has grown into a nationwide micro-lender. It is being recognized for growing its small business lending reach and developing innovative approaches to serving low-income communities and communities of color. Accion has expanded to serve Arizona, Colorado, Nevada, New Mexico, and Texas, creating a new product as a direct response to predatory merchant cash advance loans. Accion utilized internal technology improvements and innovation to increase efficiency, streamline processes, and meet growing customer needs.
“This year’s recipients have created important models to lead the CDFI industry, to reach more underserved small business borrowers,” noted Shawn Escoffery, program director of the Strong Local Economies at Surdna Foundation. “Their innovative strategies lay the groundwork for job growth and economic opportunity in communities of color and other historically disinvested communities.”