The coronavirus pandemic and the renewed focus on systemic economic inequality in our country are bringing new attention and support to community-based nonprofit lenders.
Community development financial institutions, or CDFIs, focus on rural, low-income and minority communities.
Around 300 CDFIs made more than $7 billion in Paycheck Protection Program loans to help small businesses, many of which had been left out previously.
By comparison, JPMorgan Chase, which is nine times the size of the entire CDFI industry, made only four times the amount of PPP loans.
“Many CDFIs we are in many ways like small businesses, we didn't come into this situation strong in terms of our capital,” said Luz Urrutia, CEO of Opportunity Fund. “Now more than ever, during the rebuilding, we've got to have the balance sheet strength because we are supporting these low-income communities, small businesses and communities of color.”
Opportunity Fund is one of those CDFIs. It's been raising millions of dollars since March, specifically to help minority, immigrant and women-owned businesses.
Serena Williams and MacKenzie Scott have both donated recently. But there are questions about how long all the support these nonprofit lenders have been getting will last.
“What I would say for the minority-owned businesses right now, timing is perfect and when timing is perfect, you need to strike while the iron is hot,” said Maurice Brewster, CEO of Mosaic Global Transportation. “And right now, there's a lot of support, a lot of ground swelling with dealing with small and minority-owned businesses.”
Maurice Brewster’s business received loan payment deferral from Opportunity Fund during the pandemic. His advice for other minority-owned businesses: if you can, have a relationship with a lender way before you need the money.
He says education is also going to be key for minority-owned businesses going forward.
That financial coaching is something opportunity fund is pushing for too, along with more money from congress to support CDFIs.