How our Values Inform and Drive Our Investment Operations
Authors: Roselle Croitoru, Director of Investment Operations
"What do we live for if not to make life less difficult for each other?"
– George Eliot, Novelist
Before our recently announced Community Credit Lab (CCL) Fund, the CCL organization that we acquired two years ago was born out of the need to create an inclusive financial system, with opportunities for all individuals to thrive regardless of race, ethnicity, gender, or other demographic factors.
At the 2024 Clinton Global Initiative Annual Gathering in New York City, we announced our Commitment to Action—our Community Credit Lab (CCL) Fund. Over the next three years, our goal is to raise $35M to invest directly in Black and Indigenous leaders, communities, emergent economic models, and practices—from land trusts to cooperatives and community-owned real estate—to advance racial and economic equity.
And while making strategic investments and putting capital and resources towards racial and economic justice is key to this work—it’s not enough. We have to carry that ethos through the whole process. As we unlock capital for individuals and small businesses that have faced barriers in the mainstream financial system, we have to address those barriers in how we approach lending altogether.
Our team not only strives to provide inclusive, affordable, and tailor-made program design and loan origination processes, but we also hold close to our hearts that our borrowers are the reason why our organization exists. We recognize that behind every individual loan, there is a person with unique and evolving needs, or a leader at an organization working to fight racial capitalism in their own community. Our servicing tries to avoid rigid processes for borrowers and loan treatment, which are typical of traditional financial institutions; on the contrary, it truly caters to each borrower’s specific situation.
Below are some of the most important values that, when brought into practice, guide us to better help our borrowers:
- Flexibility: We try to adapt as much as possible to borrowers’ needs.
- We customize bespoke lending structures and terms. From amortizing loans with various installment frequencies, to lending with different repayment structures including revenue-based financing. As circumstances change, loan terms initially agreed upon may no longer work post-disbursement.
- We prioritize flexibility throughout the loan. We support borrowers through changes in payment dates, amounts, and frequency, to make sure that rather than becoming an obstacle, the loan continues to enable our borrowers to pursue and achieve their goals.
“Thank you for the adjustment and the information. I will let you know when my employment situation changes.”
— Loan recipient
- Transparency: We strive to be open and honest with our borrowers about their loans with us and how our processes work. We place a high value on transparency as we know it’s essential for people and small businesses to plan effectively to cover their resource needs.
- We communicate relevant timelines and next steps, how to navigate any potential difficulties, whether we can meet requests, why an issue may have originated, or why expectations were not met.
- We look to the evolving needs of our borrower community to trigger the technological creation or adaptation of processes. Software and its enhancements often have limitations, and systems are not always able to keep up with the pace of the desired change.
- We’ve found the key elements to best support our borrowers are: clarity within the internal team, transparent communication with lending partners, and also with the borrowers, along with a strong partnership with a flexible and agile software provider.
“Thank you so much for guiding me through this process and I am very grateful for the opportunity to scale [my] business with Community Credit Lab."
— Loan recipient
- Empathy: Our servicing team’s priority is listening to our borrowers’ issues, questions, and concerns. We recognize that understanding their situation (i.e. placing ourselves in the other person’s shoes) is key to achieving an effective solution.
- We work alongside individuals and small business owners to tailor loans or adjust their terms in a way that they express will work for them, before any implementation.
- The underwriting process requires a significant amount of data collection and documentation with a host of issues that require time-consuming back and forths, including tech challenges, remote borrower locations, and language barriers. However, our team has been able to overcome those challenges through an open relationship with lending partners, who support and accompany the process, and a fully bi-lingual and borrower-centric internal team.
- Credit scores were written to support racialized capitalism, meaning Black and Indigenous borrowers are often underbanked or have lower credit scores and have expressed difficulty in trying to build credit history. We support our borrowers in building healthy credit histories by reporting consumer and commercial loans to credit bureaus on a monthly basis.
- Depending on the lending program, partnership, and borrower situation, we also forgive loan balances on a case-by-case basis.
“I truly appreciate your understanding and consideration of my situation. Thank you.”
— Loan recipient
- Respect: We emphasize a friendly, compassionate communication style and timeliness.
- We treat borrowers like a family member or a friend who reaches out for support. We use respectful and caring language that also directly addresses borrowers’ concerns and requests.
- To CCL, ‘non-extractive’ financing not only means affordable capital. It also means being conscious and respectful of our borrowers’ time and resources. We always aim to deliver prompt, kind, and helpful responses.
“We really appreciate your team's efforts to make this happen, especially [team member] who has been sending me updates for each farmer application, practically everyday, allowing us to allocate the right support to each of these farmers.”
— Loan partner
- Trust: Our lending model is based on trust. We trust our borrowers and lending partners to make the right decisions that best serve their interests.
- We prioritize maintaining the trust built during the lending program design between our investments team and lending partners. To obtain legal approval to lend in geographies and to legal entities new to our portfolio, lending program setup may experience longer timelines, as we hold the commitment to enable these programs under the terms our partners have pointed out work best for their communities.
- Balancing borrower support while also meeting compliance requirements is challenging. We ensure that programs are in place and implemented correctly primarily for customer identification, screening, credit reporting, audits, and risk assessment. Our team must build that trust with each individual borrower through clear communication and minimal requirements.
“We couldn't have done this so quickly without the partnership with Common Future and Community Credit Lab. Thank you for believing in us. The fact that at least one founder has been able to access a line for credit from a traditional bank so soon provides us with an unexpected opportunity to redeploy funds..."
— Lending partner
“Thank you!!!!! This means a lot to me. Thank you for working with me! Thank you for not giving up on me.”
— Loan recipient
At the end of the day, we are beyond grateful to our borrowers and community partners, and the donors and investors who enable our Community Credit Lab work.
