Capital Responsibility

To secure capital, small-business owners must meet lender requirements, find affordable interest rates, and understand new products from nonbank lenders. Community-based microlenders can meet the needs of business owners who face the greatest barriers to accessing credit: women, people of color, individuals with disabilities, and others. But microlenders have limited resources and can’t reach everyone. The Economic Opportunities Program’s Business Ownership Initiative works with microlenders to scale up so they can help more borrowers. Through its Microfinance Impact Collaborative, the initiative supports some of the nation’s most innovative lenders to solve common challenges like raising capital, managing liquidity, and handling risk. When business owners sought relief from high-cost, short-term financing products that were draining their cash, the Business Ownership Initiative and the collaborative helped form the Responsible Business Lending Coalition. The coalition then created a principles-based approach to lending, including a Small Business Borrowers’ Bill of Rights. The California legislature recently passed a law modeled on the coalition’s recommendations that provides transparency on the costs of small-business financing products—the first of its kind in the nation. Other states and federal lawmakers are considering similar legislation.

aspeninstitute.org/eop | borrowersbillofrights.org