Seeing Through the Nebula

NASA’s James Webb Space Telescope (JWST) is designed to peer beyond the dust and gas in nebulae, enabling observation of the formative stages of stars and galaxies. While previous space telescopes captured images resembling large clouds, JWST’s infrared technology reveals a multitude of young stars.

Just as JWST pierces through cosmic clouds, Common Future aims to see through the financial nebula of credit scores and collateral—long-standing barriers to affordable capital for communities. Community Credit Lab (CCL), Common Future’s investment entity, has been developing lending tools and practices to help our community partners bring the opportunities we’ve been missing to the forefront and demonstrate their potential to shine.

Our back-office services are designed to empower community organizations to pilot lending programs on their own terms—without passing costs onto the community or requiring them to build the necessary loan origination and servicing infrastructure. Loan origination, loan servicing, and fund management are costly and labor-intensive, and the amount of work and cost increases exponentially for relationship-based lending pilot programs. This is not only due to the time needed to get to know potential borrowers, but also to adapting processes to address their needs while maintaining regulatory compliance. And our goal in providing our community-centered back office services is to take all of these factors into consideration and apply them with the flexibility that is needed in different contexts with different priorities - to show what is possible when we look through a different lens.   

We’ve learned a lot about what is needed to enable lending practices that increase access to capital, improve the affordability of capital, and shift decision-making power, while also balancing compliance needs. Below are the best practices we’ve discovered in our journey.

Developing Lending Partnerships Together

Lending partnerships are most powerful when community partners lead the way. Our lending partners are community organizations that are not only closely familiar with individuals and small businesses in their communities but also representative of those communities. They share their communities’ needs with us and, with our team’s support, lead the design and development of the lending program and underwriting and loan criteria. Once our partners identify the organizations that could benefit from the program, they submit a referral to CCL. Loan applicants then complete a loan application form and submit the required compliance documentation.

The relationship-based referral process helps minimize underwriting risks such as identity fraud. Involving a third party with an established relationship with loan applicants has proven valuable when conducting standard compliance procedures under our Customer Identification Program (CIP). One example of how this has been beneficial is when we were conducting identity verification on a loan, and the beneficial owner did not feel comfortable sharing their Social Security information directly with our remote organization, whom they did not personally know. Yet, given the relationship this individual had with our lending partner, they were comfortable allowing that partner to conduct the SSN verification on our behalf and attest to it. Having a trusted partner and the ability to remain flexible in our processes enabled capital to flow to places it otherwise would not.  

Additionally, many of our borrowers have limited credit history and lack traditional forms of financial collateral. Relationship-based lending helps mitigate the credit risk of unsecured loans because our partners participate in the loan servicing process. For example, when lending partners run accelerator programs or provide technical assistance to ensure borrowers have the tools they need to successfully manage their businesses, we often observe increased repayment capacity. Another lending partner offers partial loan forgiveness incentives to borrowers who actively engage in their program and give back to the community while the loan is active. Those forgiveness payments—made by the lending partner to CCL on borrowers’ behalf—lower loan balances, and encourage borrowers to fully repay their loans, helping them build healthy credit histories. We’ve seen how having lending partners who are actively invested in the success of their community businesses and organizations reduces the need to rely on more traditional forms to assess accountability and has demonstrated strong repayment results. 

Flexibility of processes and systems is key.

Flexibility and transparency in internal processes that center communities are essential for directing capital to where it’s needed most, and we’ve found that technology is key to managing supportive lending operations end-to-end.

Loan Origination
We offer several loan types and terms. Our system enables fully online data intake for the loan application process, with customizable application requirements based on business structure and loan type. While our standard practice is automated verification—a technology-driven process that uses software to verify a person's identity—we remain flexible and can conduct documentary verification when needed. This is especially helpful for borrowers in remote locations with limited access to technology. In such cases, lending partners have stepped in to collect physical documents and submit them on the borrowers’ behalf. As reported by a partner, “CCL offered lending platform and back-office services. Initial challenges with remote customer support for farmers with limited tech familiarity were addressed by: Direct support from [our organization] and advisors; granting [our organization’s] staff full platform access, improving responsiveness; and ongoing customization of the platform to [borrower] needs.”

Loan Servicing
Borrowers and partners can access loan information in real time through their online portal. This increases borrowers’ control over their finances and empowers them to request loan amendments when needed. For example, our system allows repayment schedule adjustments either before the payment date or after missed payments, enabling installment deferrals when repayment capacity is limited. These amendments do not affect credit scores.

For borrowers who have missed payments that have already been reported to credit bureaus but wish to get back on track, we restructure their loans according to a newly agreed-upon repayment schedule. While historical missed payments remain, their account records reflect their current status. In rare cases where a borrower is truly unable to repay due to financial hardship or major health setbacks, we explore loan forgiveness rather than charge-offs to minimize the impact on their credit score. Offering this type of support is helpful, especially compared with loans from traditional financial institutions, which, due to their restrictive nature, would have continued to put these individuals at risk.

For loan repayments, scheduled installments are automatically debited from borrowers’ bank accounts. We’ve found this mechanism works well for most borrowers and contributes to a strong repayment rate. However, alternative payment methods are available, and our system allows seamless tracking of those payments. Providing streamlined ways for borrowers to engage in the loan repayment process, while also being open and flexible to the wide variety of needs people may have over the multi-year journey of a loan, builds trust and ultimately enables successful loan repayment.   

Scalable and Replicable.

Despite the flexibility in our process, we’ve ensured that these solutions are scalable and replicable—key to maximizing impact. Since inception in 2019 and through year-end 2025, we have successfully enabled 12 partnership-driven lending programs, and have deployed $2.8 million.

From a fund management perspective, we create a separate fund for each partnership and can replicate the lending model with slight adaptations. This allows us to track loan and partnership performance, impact, and any capital restricted to fund a specific program. Managing our fund this way enables us to produce quality reporting from which both investors and lending partners benefit. 

From a loan origination and servicing perspective, we’ve standardized and simplified our loan application form and required documentation. We have limited the data intake to basic information about the business, beneficial owner(s), and regulatory compliance requirements. Business management information and metrics on business health, such as financials, are not collected by CCL because the lending partner reviews this information prior to making a loan referral. We honor our partners’ direction in how they envision and define impact, which may vary from partner to partner. This is why we do not collect specialized impact data from borrowers to track metrics throughout the life of the loan. As shared in reflections from one of our lending partners, “ Simplification and clear step-by-step guidance improves borrower confidence and independence“. Our loan management, repayments, risk rating, risk management, and reporting are also standardized across the entire portfolio to ensure operational efficiency. 

When managing partnerships and their related loans, we strive to embody the values that guide us through each stage of the lending cycle. This mission alignment helps us attract like-minded partners—those who may lack back-office capabilities to run their own lending operations—and keep them engaged. Likewise, by showcasing these principles in relationship-based lending and management, we aim to demonstrate impact investment strategies that foster a ripple effect of trust-based community funding.

No longer must we imagine a future of financial inclusion—we are actively building it. Our tools are our space telescope. They enable us to see the possibilities and engage with them. They are tangible and within reach, and we are excited to share how to use them.

About the Author:

Roselle Croitoru, Director of Investment Operations at Common Future, grew up in Latin America and channels her experience with economic inequality into a career focused on financial innovation and equity. She brings expertise in impact investing, finance and economic development.