Historically, business ownership has been one of the important ways Americans have generated income and wealth. But the opportunity to start and grow a business has never been equally available to all. Community development financial institutions (CDFIs) have long been a source of support for business owners of color who have lacked access to traditional sources of capital and small business support. In light of the challenge to CDFIs to scale the deployment of capital to meet existing needs and new expectations, the Aspen Institute’s Business Ownership Initiative has been taking stock of its learnings from decades of studying and partnering with CDFIs that have sought to serve just these small businesses.
In this paper, we share lessons in six key areas related to microloan origination, including specific practices of CDFIs that are currently originating many hundreds or thousands of microloans annually. The findings are drawn from the members of BOI’s Microfinance Impact Collaborative (MIC), which has been convening and collaborating since 2015 and whose members collectively originated 11,978 loans totaling just under $310 million in 2022. This paper follows a prior one that described the critical role that microloans — loans less than $50,000 — play in meeting the needs of Black and Latinx borrowers and the challenges that CDFIs face in scaling microlending.
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Tweet Report: “Scaling Lending to Entrepreneurs of Color: Strategies and Operational Tactics for High-Volume Originations” by @ericthefez, Joyce Klein @Aspen_BOI, and @timothyogden.
Tweet Business ownership is a powerful way to generate income and wealth, but the opportunity to start and grow a business isn’t equally available to all. How can CDFIs boost capital to entrepreneurs of color?
Tweet CDFIs often support entrepreneurs who lack access to traditional sources of capital, but may face challenges in scaling this deployment. How can they increase the number of loans they’re able to service?
Tweet Members of the @AspenInstitute’s Microfinance Impact Collaborative originate thousands of loans annually. What can other CDFIs learn from their success in scaling this deployment of capital? Read key lessons from @Aspen_BOI.
Tweet This brief by @Aspen_BOI describes how community financial institutions can: (1) make their products and processes more appealing and accessible to business owners of color, and (2) originate and service these loans at high volumes.
Tweet In 2022, members of @Aspen_BOI’s Microfinance Impact Collaborative — @AOFundTweets, @Allies4CB, @Ascenduslends, @DreamSpringUS, @justinepetersen, and @LiftFundUS — made 12k loans totaling $310 million. What can other CDFIs learn from their leadership?
Scaling Lending to Entrepreneurs of Color
- Program: Microlending Accelerator Program
- Publication: Scaling Lending to Entrepreneurs of Color: Part I – Core Operational Challenges
- Publication: Scaling Lending to Entrepreneurs of Color: Part II – Strategies and Operational Tactics for High-Volume Originations
- Video: Scaling Lending to Entrepreneurs of Color
- Blog Post: Two New BOI Resources on Scaling Lending to Entrepreneurs of Color
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The Business Ownership Initiative works to build understanding and strengthen the role of business ownership as an economic opportunity strategy. BOI is an initiative of the Economic Opportunities Program.
The Economic Opportunities Program advances strategies, policies, and ideas to help low- and moderate-income people thrive in a changing economy. Follow us on social media and join our mailing list to stay up-to-date on publications, blog posts, events, and other announcements.
