Making the Case for Affordable Credit: Portfolio Data and Highlights

This post was originally published by Community Credit Lab, which is now part of Common Future.

Without the direction of our Lending Partners and CCL’s lending programs, accessing affordable and patient credit would otherwise be a preventative barrier for our borrowers: credit score minimums, collateral or personal guarantee requirements, and financial history requirements often are barriers and can raise the costs of loans or extensions of credit such that the costs are prohibitive. At CCL, we believe that it’s time to try something different: we envision a financial system that enables everyone to thrive by creating and supporting decentralized solutions that pivot capital and power to communities.

When we say our Lending Partners “design”, we mean they lead the design of lending programs for the communities they represent. Our Lending Partners define the loan programs that will fill a gap in their community, set the preliminary criteria for who gets to access loans, and even lead the terms of the loans for their communities. Our Lending Partners are moving away from the 5 C’s of traditional credit (character, capacity, capital, collateral, and conditions) and thinking about what it means to belong, participate, and show up in their communities. CCL’s team supports them to lend based on criteria rooted in their relationships and trust built with community members. Our support also includes crosschecking applications against responsible lending criteria, such as can this person or business fit this loan payment within their budget, and adhering to applicable state and federal compliance requirements.

Looking back at loan data from the past year and a half, we are starting to see that decentralized lending strategies based on trust and relationships are working with respect to repayment capability. Together, with our Lending Partners, we are effectively supporting community members that face barriers to access affordable credit. And, once people have access to CCL’s loans, they are able to repay their loans and are in communication when they need support. Every person who takes out a loan doesn’t always follow the same traditional pattern of repayment, but each person is given the flexibility to communicate what works best for them and when. That patience and flexibility is key to supporting people on their journey to accessing credit to achieve their goals.

To date, at the direction of our Lending Partners, CCL has:

• Lent $303K to support 75 people directly;
• 10 loans have fully paid off;
• 41 loans are actively repaying;
• 20 loans are still in their deferral period;
• 4 loans written off (partial or full).

As we continue to evaluate data and information, we know it’s important to reflect on our approach using both qualitative and quantitative information that allows for a nuanced understanding. We seek to continue taking guidance from our Lending Partners on how can improve to support people effectively in their communities and incorporate their feedback into our approach.

As we continue adding lending programs at the direction of new Lending Partners (stay tuned for 3 new commercial lending partners we’re onboarding soon), we expect these numbers to continue telling important stories about what’s possible when we believe in others and support them to achieve their goals on their terms. We’re looking forward to adding our new Lending Partners in the coming month and beginning to deploy commercial loans with their direction. In the coming months, we’re planning to deploy 30 new commercial loans, 20 new consumer loans, and over $1 million in affordable credit to support individuals and small business owners to achieve their goals. Stay tuned as we continue to learn, think, and act differently at the direction of our Lending Partners.