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CNote's impact metrics for Q2 2020 -- 351 jobs
By Impact Metrics

CNote’s Q2 2020 Impact Metrics

We know one of the main reasons you invest with CNote, is because of the impact your investment has.

We’re proud to share CNote’s Q2 2020 impact data.

CNote's impact metrics for Q2 2020 -- 351 jobs

In Q2 2020, our members helped create/maintain 350 jobs!

Over half of all invested capital was deployed with minority-led businesses and we deployed nearly half of all dollars to female borrowers!

If you’d like to see our annual impact data, along with an explanation of how we map CNote’s impact investments to the UN’s Sustainable Development Goals.

Our 2019 Annual Impact Report is also available if you’d like to learn more about the impact CNote is having on communities and individuals across America.

By CNote, Impact Metrics

CNote’s Q1 2020 Impact Metrics

We know one of the main reasons you invest with CNote, is because of the impact your investment has.

We’re proud to share our Aggregate Q1 2020 impact data.

In Q1 2020, our members helped create/maintain 173 jobs!

Over half of all invested capital was deployed with minority-led businesses.

If you’d like to see our annual impact data, along with an explanation of how we map CNote’s impact investments to the UN’s Sustainable Development Goals.

Our 2019 Annual Impact Report will be published soon, we apologize for the delay which was caused by the ongoing pandemic.

By CNote, Impact Metrics

CNote’s Q4 2019 Impact Metrics

We know one of the main reasons you invest with CNote, is because of the impact your investment has.

We’re proud to share our Q4 2019 impact data.

In Q4 2019, our members helped create/maintain 260 jobs!

Over half of all invested capital was deployed with minority-led businesses.

If you’d like to see our annual impact data, along with an explanation of how we map CNote’s impact investments to the UN’s Sustainable Development Goals, read our 2018 Impact Report.

Our 2019 Annual Impact Report will be available soon.

By CNote, Impact Metrics

CNote’s Q3 2019 Impact Metrics

We know one of the main reasons you invest with CNote, is because of the impact your investment has.

We’re proud to share our Q3 2019 impact data.

In Q3 2019, our members helped create/maintain 324 jobs!

Over half of all invested capital was deployed with minority-led businesses.

If you’d like to see our annual impact data, along with an explanation of how we map CNote’s impact investments to the UN’s Sustainable Development Goals, read our 2018 Impact Report.

 

By CNote, Impact Metrics

CNote’s Q2 2019 Impact Metrics

We know one of the main reasons you invest with CNote, is because of the impact your investment has.

We’re proud to share our Q2 2019 impact data.

In Q2 2019, our members helped create/maintain 111 jobs!

We’re also extremely proud to announce that more than 70% of CNote capital went to minority-owned businesses!

If you’d like to see our annual impact data, along with an explanation of how we map CNote’s impact investments to the UN’s Sustainable Development Goals, read our 2018 Impact Report.

 

By CNote, Impact Metrics

CNote’s Q1 2019 Impact Metrics – Infographic

We know one of the main reasons you invest with CNote, is because of the impact your investment has.

We’re proud to share our Q1 2019 impact data.

In Q1 2019, our members helped create/maintain 262 jobs!

Over half of all invested capital was deployed with minority-led businesses. We’re also extremely proud to announce that more than 78% of CNote capital went to LMI communities!

If you’d like to see our annual impact data, along with an explanation of how we map CNote’s impact investments to the UN’s Sustainable Development Goals, read our 2018 Impact Report.

 

By CNote, Impact Metrics

CNote’s Q4 2018 Impact Metrics – Infographic

We know one of the main reasons you invest with CNote, is because of the impact your investment has.

We’re proud to share our Q4 impact data.

As you may have noticed, our quarterly job creation numbers are trending upwards along with our allocations across key demographics, like women, minority communities, and LMI communities.

In Q4 2018, our members helped create/maintain 430 jobs!

Over 65% of all invested capital was deployed with minority-led businesses!

We are extremely proud of our Q4 results and will be releasing our full 2018 Impact Report shortly. In the interim, check out our 2017 Annual report.

By Borrower Stories

Jeremy Priest – Knotty Ties – Made In The USA, With Purpose

Ties that fit all

A tie can say a lot about its wearer. The first ties marked out the court members of Louis XIII, a French king who had admired the neck accessories of the Croatian mercenaries and adapted them as mandatory attire for royal gatherings.1

In the following 300 years, ties evolved into the more simple and streamlined form we know of today, but through subtleties in color and pattern they continue to provide distinction to their wearer. A red tie, for instance, can signal charisma or authority, while a tie covered with hotdogs might send a different message altogether.

Product offerings at Knotty Tie Co. in Denver, CO

That said, a tie is an accessory you want to get just right. Knotty Tie Co. makes it easy to do just that.

From its chic and accessible e-commerce site, customers can select and order ties from the comfort of their own homes. With over 350 patterns and 560 color options, they can design just the right tie, bowtie, or scarf for any occasion: from themed wedding attire to workplace swag, to a thoughtful gift for a loved one. They can even customize from scratch, entering their ideas on the website, which the company’s graphic designers will then mock up for them.

It’s a unique company that creates unique ties. But even more distinctive is the story behind it.

A unique business model derived from an altruistic mission

When we asked what he did to make his customers happy, President and CEO Jeremy Priest mentioned the phrase Made in America.

“For us, Made in America isn’t just a reason to buy…”

What this means is that his company produces every tie in their facilities in Denver, Colorado. With equipment they bought and painstakingly learned how to operate, they print the patterns customers select onto quality fabric. Then they sew the fabric into ties — completely by hand.

Employee operating textile cutting machine at Knotty Tie

This allows them to produce small batches of customized ties in a relatively short amount of time, something their competitors, many of whom manufacture overseas, cannot deliver on.

For us, Made in America isn’t just a reason to buy, it legitimately gives us a competitive advantage,” said Jeremy. Later he added, “It’s incredible how the mission [of the company] weaves into that.”

And it’s the mission of Knotty Tie Co. that truly makes it stand out. Surprisingly, it has less to do with customized ties, and more to do with the people who make them. The employees who sew the final product by hand are all refugees who fled various conflict countries to start a new life in the US.

Refugee employees at Knotty Tie

And CEO Jeremy Priest’s mission is to provide them, and other refugees, with meaningful employment opportunities.

The birth of a mission

“The mission of the company is to create meaningful employment opportunities for refugees…”

Like most people, Jeremy didn’t initially enter adult life with enough belief in a cause to build an entire company around it. Instead, his convictions grew gradually through life experiences.

The first of these was a military career of six years, four of which were overseas. “One of the things I witnessed in my military duties…was that people were yearning for economic inclusion and economic opportunities.”

Inside the store of Knotty Tie Co.

This inspired him to study economics and get an MBA in entrepreneurship. At the same time he was pursuing his studies, he saw that there was a population with economic need in his very own community: the 2,000 refugees who set roots down in Colorado each year.

“I really recognized that there were enormous barriers to employment and that society generically wasn’t really recognizing the barriers, and wasn’t recognizing the dignity of the arriving population and the contributions they could make,” Jeremy said.

One of Knotty Tie’s employees intent upon his work

Instead, many refugees had to take random jobs with odd hours as they struggled to transition to their new lives.

Thankfully, there were non-profit programs that helped refugees transition, providing English classes and developing their job skills. Jeremy volunteered for one of those programs. But a key interaction in 2011 convinced him his clients needed something more.

“To me it seemed like there was just something missing…”

He was training two refugees in janitorial skills when they told him they had 20 years’ experience in sewing and a lifetime of experience in farming. In “a crisis of his conscience,” he realized he was training them in the wrong skills.

“I appreciated the resettlement agencies…But to me it seemed like there was just something missing — and that was the connection between [the refugees’] existing skills and the employment pathways we should be putting them in touch with.” And that made it less meaningful for them.

Employee cutting tie

Thus began an effort to convince the non-profit to not only train the refugees in basics, but employ them in their existing skills, namely sewing. But when Jeremy realized this was outside the scope of the program, he began to take matters into his own hands.

Scrapping it

Raising up his own enterprise to employ refugees in meaningful work was no easy task. In the beginning, it was just Jeremy and his undergrad classmate and co-founder Mark — and they had to scrap it.

Knotty Tie co-founders Mark Johnson and Jeremy Priest

“Truth be told Mark and I were just so broke that we didn’t have cars,” Jeremy told us when talking about the early days of his company.

“Our first office was in an artist collective and we had to be able to walk there.” During their Kickstarter campaign in 2013, the two frantically produced ties, Mark in the afternoon after his shift at a cafe, and Jeremy all day before his night classes.

As the company took shape, they sought investors who would fund them despite them not having a high credit score. Thankfully an impact investor gave them seed funding of $40,000, and with it the valuable affirmation that their idea was worth all those long hours. This enabled them to hire two refugees with sewing experience and purchase some equipment to scale their efforts. It also qualified them to receive a loan of $10,000 from Colorado Enterprise Fund, a CDFI in CNote’s network.

“CEF was really an angel at the time in which nobody one else was willing to consider us on paper…”

With the money, Jeremy and Mark were able to meet payroll and purchase more equipment.

Later, when Jeremy showed CEF they could cut costs by two-thirds by manufacturing in-house, they provided a second loan of $100,000 to buy their own textile machinery. It was through CEF that Knotty Tie was able to fully implement its Made in America business model.

Knotty Tie’s textile printing machine

“CEF was really an angel at the time in which nobody one else was willing to consider us on paper,” Jeremy reflected. “They were willing to altruistically evaluate why we’re doing what we’re doing and what we were able to accomplish to date.”

Meanwhile, Mark, who was talented in technology, had taught himself graphic design and e-commerce and taken classes in full-stack web development, all of which equipped him to make the beautiful storefront website we see today.

Future plans for Knotty Tie

Mark and Jeremy in front of their storefront

With his signature eloquence, Jeremy told us of his future plans. His vision–both lofty and inspiring–includes developing business models to employ refugees even in camps overseas.

“These are refugees, but they are self-sufficient.”

In general, he wants to spread his mission of refugee employment to other for-profit enterprises, changing the global narrative from refugees who are helpless, to “These are refugees, but they are self-sufficient.”

But for now, he is focusing on the tie company, which he hopes to make a shining example of refugee resettlement enterprises to the world.

Marc Munyakabuga, production manager

We think he’s doing a good job of it. To date, Knotty Tie has a formal board of manufacturers consisting of seven members. Additionally, it employs six sewing refugees, two of whom have started college courses to pursue careers in fashion design.

One Congolese refugee named Marc currently serves on the board as production manager. In the future, he wants to start his own small business.

Learn More:

The Colorado Enterprise Fund, was founded in 1976 and is a non-profit lending institution that offers loans to entrepreneurs and small businesses unable to get traditional bank financing. For over 40 years, Colorado Enterprise Fund has been helping people realize their dreams of starting and growing their own businesses.

Knotty Ties – Visit their e-commerce store and buy custom ties for any occasion here.

CNote – Interested in helping create another success story? CNote makes it easy to invest in great CDFIs like the CEF The Colorado Enterprise Fund, helping you earn more while having a positive impact on businesses and communities across America.

By Borrower Stories, Wisdom

Yahaira Caraballo – Nail Glam Studio – Sisters Find Success in the South Bronx

Yahaira and her sister Onaney

Perseverance Breeds Success

It’s October 1st, 2013, opening day for Nail Glam Studio and Yahaira Caraballo is nervous. After months of grueling effort, her south Bronx-based nail salon is finally ready and open to the public.

The only problem? The public didn’t come. Not on the first day, at least.

Like everything that brought her to this point, however, Yahaira’s persistence soon paid off. Although Nail Glam Studio, in her own words “didn’t make a dime the first day,” it did manage to turn a profit by the end of the first week and has only grown since.

Nail Glam Studio Founder, Yahaira Caraballo

While Yahaira’s determination enabled her to push past a number of obstacles, it took the help of many other hands to effectively turn Nail Glam Studios from a vision in her head into a thriving business.

One primary source assistance came from CNote’s CDFI partner, the Pursuit Lending, which provided essential guidance in the early stages of forming the business, along with the funds to make the necessary upgrades to comply with new regulations and to expand operations.

The other essential ingredient in Yahaira’s small business success story is family. From her brother helping to build and repair the shop to her husband providing the painting expertise, she was not short on support from those closest to her.

Yahaira did not just receive help from family, however, but was able to provide something even more important to her sister, Onaney Caraballo. In fact, one could say that Onaney was the driving force behind the idea to open Nail Glam Studios all along.

The Origins of Nail Glam Studio

Yahaira was sure that she wanted to start a business since she was young but just couldn’t find a place where she could make an impact. Despite taking on a full-time job in New York City, she still never lost her entrepreneurial ambition and continued to look for ideas and ways that she could turn her dream into reality. In the end, her sister provided the inspiration to finally take the steps towards forming a small business of her own.

Nail Glam Studio Team

Following a move to New York City from their native Dominican Republic in 2003, Onaney quickly established herself as a stylist, gaining recognition at local nail salons and practicing on Yahaira in her spare time. Seeing her sister’s talent and looking to finally realize her own dream to be a small business owner, Yahaira cleared her savings account and began to take the steps necessary to open Nail Glam Studios.

Nail Glam Studios soon become more than just a business for the two sisters. In fact, it became a way for both to live out their respective dreams and come together in a way they never previously imagined. Where Yahaira could fulfill her ambition of owning and operating a small business, Onaney could finally have the kind of stable and supportive working environment that enabled her to focus on improving her craft without worrying about working hours or other issues that usually come with freelance and studio work.

The idea was in place. Now Yahaira just needed funding to get Nail Glam Studios off the ground.

Getting a Loan

Yahaira first sought to get a personal loan from Chase Bank. Such loans come attached with high interest rates on repayment, but Yahaira was dedicated to seeing the idea of opening a nail salon for her sister through to completion. While she was refused for the loan on the grounds because that local branch did not invest in small businesses of Nail Glam’s size, she was given referrals that culminated with her collaboration with Pursuit.

Pursuit helped connect Yahaira with the right experts, who were able to walk her through the intricacies of operating a small business. For example, they taught her how to complete the required paperwork, including a fully-formed business plan, that were required to apply for a loan. Along with the business advice and guidance, Pursuit provided the loan necessary for Nail Glam Studio to comply with the aforementioned state regulations, as well as enable the hiring of two additional staff members to expand the business with new pedicure and manicure stations.

Success and Community-Centered Growth

Since that first day without a paying customer, Yahaira estimates that they see more than one new customer every day simply through word-of-mouth. She credits this to a number of factors, including her focus on providing quality service at an affordable price. However, the emphasis on building a strong community is what really sets Nail Glam Studios apart from other nail salons in the area.

To that end, Nail Glam Studios holds community events every three months, usually corresponding with public holidays like Mother’s Day and Thanksgiving. Yahaira sees the events as a way to give back to those who are a vital component in the nail salon’s success.

Yahaira particularly enjoys Customer Appreciation Month, held every October to commemorate Nail Glam Studio’s founding–and that first nerve-wracking day–where she provides free goodie bags filled with nail-care products to customers.

A Family Success

Yahaira with her brother and sister

While building a community of happy customers in the south Bronx makes Yahaira proud, the most meaningful impact comes from much closer to home. A great example coming in the form of a text message from her nephew. In that message, he thanked his aunt for providing a place for his mom, Onaney, to practice nail styling and pursue her passion. This display of gratitude touched Yahaira and served as proof that she had achieved in what she set out to do–both professionally and personally. After all, none of this would have happened without Onaney, and now the sisters have succeeded in building a thriving business together.

Looking Forward

What began as a three-person operation has, with the help of the SBA micro-loan from Pursuit, now expanded to a staff of seven. For her part, Yahaira says that she is grateful for the loan and all support she has received until now from Pursuit. “I’m speechless with everything I’ve gotten as result of submitting this application. They have a lot to offer.”

Yahaira is now paying forward the help she was given by Pursuit in her own way, assisting other small business owners in the south Bronx as they seek to overcome the inevitable struggles encountered while striving to their own entrepreneurial dreams. She also has ambitions to open another store in the future to create even more employment in the local community.

Her story underscores the commitment of CNote and the Pursuit to helping ambitious women like Yahaira receive the support they need to turn their dreams into reality and enable local communities to thrive as a result. If you, too, would like to make a difference, please consider investing in CNote today.

Learn More:

  • Nail Glam Studio
  • Pursuit – A leading CDFI based out of New York and the CNote partner that provided the loan and technical assistance that helped make Nail Glam Studio a reality
  • CNote – Interested in helping create another success story? CNote makes it easy to invest in great CDFIs like the Pursuit, helping you earn more while having a positive impact on businesses and communities across America.
By Borrower Stories, Wisdom

Shavon Marley – Marley Trucking – An Opportunity Borne From Adversity

There’s a saying that goes, “If you bought it, a truck brought it.” That may only be true 73.7% of the time, but either way, there are a lot of truckers out there in the U.S. delivering the things that we use and rely on every day. Over a million, in fact.

Marley Transport & Trucking is one of those trucking companies. Yet, when we interviewed founder Shavon Marley, we found the incredible story behind this company is what makes it stand out from the crowd.

Shavon Marley, Owner & Founder of Marley Trucking

A family-operated business

True to its name, Marley is largely a family-operated business. Shavon Marley started the company. Later, her husband took the primary role as head of operations and dispatch. Her dad was the first driver they hired, bringing decades of experience and industry connections to the table. Her uncle, who had gotten involved in trucking through her dad, is their second driver; and their third and most recent, added due to a higher volume of work, is a friend of a friend.

Marley may be one trucking company out of millions, but it’s more than a business, it’s a family, both literally and figuratively. Needless to say, this small company, which continues to grow, is not only having a significant impact on Shavon’s family but her community as well.

Marley Trucking Team

For Shavon and her husband, it was a dream long in the making. Originally Shavon worked full time in sales, and her husband in cable and satellite installation, a demanding job that required him to work six days a week outdoors. “My husband and I were high school sweethearts also,” she told us. “…We always had this thing where one day we would figure out how to have our own business and set our own schedules, and be able to travel and be able to work from wherever we travel.”

That was the dream. But it was not until the onset of some difficult and unexpected circumstances that Shavon began to take action, turning her dream into a reality.

Tenacity in the face of pressure and adversity

Hyperbaric oxygen therapy room (Photo credit: mayoclinic.org)

The above image is of a therapy session occurring in a hyperbaric oxygen chamber. In 2016 Shavon would find herself spending a lot of time in these tanks: she was diagnosed with breast cancer in April of that year.

Others may have balked in the face of such hardships, but Shavon made the most of it. Her treatment allowed her “a lot of time away from work, and also a lot of time to think,” she told us with a laugh. Therapy sessions would last 7 hours each and occur 2-3 times a week — all without the distraction of electronics. She used the time to ruminate at length about the business she and her husband had always wanted to start.

“I’m picking up on inspiration everywhere.” -Shavon Marley

But she didn’t only think. She found herself engaging in conversation with some other patients. “I’m in this tank with all old people — but a really good group of old people.” This included business owners, people experienced in the trucking industry, and even a woman who had started a welding business and could provide advice in thriving in a male-dominated industry. “I’m picking up on inspiration everywhere,” Shavon told us. “So I’m going into this tank with my pen and paper, and I’m getting my questions answered.”

For some specific concerns, however, the people she was close to didn’t have all the resources she needed. “I didn’t really have immediate people within my trust circle I could go to and say, ‘How do I do this? What do I need to know? Does the loan make sense?’…I just didn’t know what to do.” Meanwhile, there was an increasing source of pressure in her ever-growing absence away from work, and her husband’s own job whose hours were long and kept them apart at such a challenging time.

Marley Trucking, a story of teamwork

But her father, a seasoned trucker, always believed in her. “He’d always tell me, ‘You’re a big girl, you’re smart, you can figure it out, you can figure anything out…’ — Okay, well, if I figure it out,” Shavon recounted, “then I solve all these problems.” With some help, she did.

One big part of the equation was assistance from Carolina Small Business.

Figuring it out with Carolina Small Business

When Shavon first connected with Scott Wolford of Carolina Small Business Development Fund, the business she had in mind was a dump truck business. Eventually, this would evolve into the transport and trucking business of today. Needless to say, there was extensive thinking, collaboration, and planning along the way, but Scott’s guidance helped see her through.

Scott found a driven, hardworking client in Shavon. “I think he could tell I’d never written a business plan before,” Shavon recounted. “But I think he picked up on the fact that I’ll research any and everything until I figure it out.” He directed her energies by coaching her on writing the business plan, providing tools and resources, and bringing certain costs and considerations to her attention — “all the things that you really have to kind of put some time into forecasting when you’re starting a business.”

In April of 2018, all of the hard work came to fruition. Shavon received a loan which was able to support her new business and fund insurance for the trucks in her growing enterprise. On April 30, 2018, Marley Transport & Trucking pulled its first load. Since then Marley Trucking has continued to grow and establish itself as a reliable transportation option across North Carolina.

The fast-growing fleet

Conclusion

There were still challenges after launch, such as finding brokers, meeting a high volume of work, and navigating the logistics of intermodal hauling. But Shavon used her trademark grit and research abilities to pull through. Now Marley Trucking has three drivers and does intermodal hauling from the Port of Wilmington.

Recently, Shavon and her husband took a trip to Mexico. Her husband would check his laptop in the mornings, but the afternoons would be devoted to hitting the beach. Working from wherever and whenever they want — their dream had finally come true.

“I don’t think we could’ve done any of that…without the funding,” Shavon told us. “We certainly wouldn’t have been able to grow.”

Learn More

Marley Trucking is based out of Raleigh, NC. If have transport needs in North Carolina, they can be reached at 919-757-5425.

Carolina Small Business fosters economic development in underserved communities through access to capital, business services, and policy research. Since 2010, the non-profit community development financial institution has invested more than $50.7 million through 661 loans to small businesses across North Carolina helping to create or retain more than 2,267 jobs.

 

By CNote

We’re raising rates in 2019!

CNote has always been committed to delivering tangible social impact while providing competitive financial returns. In 2019, we’re increasing the return on all CNote accounts to 2.75% as we work to prove that investing in a better world can still be profitable.

Impact + Financial Returns

We’ll continue to deliver the same great impact along with assuring that the capital we provide our non-profit partners is affordably priced and will continue to support sustained economic development in communities across America. CNote’s ultimate mission is to help close the wealth gap in America by increasing access to capital for communities that were commonly cut off from traditional funding sources.

Maria Harrington, Owner of Casa de Español, a CNote small business success story

As CNote’s CEO Catherine Berman noted, “For a long time, doing something good with your money wasn’t always the smartest financial decision. We’re challenging that thinking. In 2019, we’re making it even more financially rewarding for our members to invest with their values. If you’ve got extra cash sitting in an account paying you next to nothing, an investment in CNote is a great way to make your money work for you in 2019.”

Next Steps

Existing members don’t have to do anything and will see the increased earnings reflected in their account dashboard for January.

New members can sign up today and enjoy the increased rates starting January as well.

Additionally, CNote members can increase the APY on their accounts up to 3.00% by referring friends and family. You can learn more about the bonus requirements when you log into your secure dashboard.

View The Release

You can review the full press release here.

 

By CNote, Impact Metrics

CNote’s Q3 2018 Impact Metrics – Infographic

We know one of the main reasons you invest with CNote, is because of the impact your investment has.

We’re proud to share our Q3 impact data.

Our network of CDFI partners continues to grow along with our capital allocation thanks to investments from members like you.

Members like you helped create/maintain 675 jobs!

You’ll be happy to know that your money went directly to underserved communities with over 83% of all invested capital going to minority-led businesses!

We are extremely proud of our Q3 results and look forward to delivering even more impact in Q4 and beyond.

By Borrower Stories

Julia & Keith Pooler – Sacramento Laundry Company – From Coin-Ops to Job Creator

From Coin-Op to Hundreds of Employees – The Story of Julia and Keith Pooler

Often, we profile small businesses that may be solo operations or just have a handful of employees–yet the entrepreneurs that run those companies will always have a grand vision for just how big they can grow their companies. For many their benchmark may be focused on the number of customers they serve or the number of employees they have–but you can always be sure that the vision is ambitious. Read More

By Borrower Stories

Marilyn Yu of Shared SF | Building a Space For Inspiration & Community

SHARED SF is founded on the apparent contradiction that 1 + 1 = 3. But as you’ll see, the math adds up.

Doing more together

What doesn’t fly in mathematics, can be irrefutable in the currency of community: When people work together, they can accomplish more than the sum of their parts.

And synergy is what SHARED SF is all about. “SHARED is a shared workspace for creative people. So that’s anyone who builds, designs or invents something,” explained founder Marilyn Yu. “It is based in the belief that together we can create greater things than we could individually or in isolation,” she states.

A space for entrepreneurs and creators

Indeed, if you take a walk around the premises, you can see how the physical layout of the place reflects that vision. From office spaces to fabrication spaces, communal tools and equipment, and lockers, SHARED provides just the right amenities to design anything from a motorcycle jacket to a website for an emerging startup.

There are larger spaces that allow people to “make a mess,” and small, quiet spaces “for work that requires a lot of thought and/or concentration.” There are also hangout spaces for members to discuss innovative ideas or just get to know one another.

Though the rooms vary in functionality, the place is decorated throughout in sleek, modern style, with black and white photos, dark wooden floors, and matted glass panel rooms. It reflects the values of creativity, innovation, and collaboration that are prevalent throughout this community space.

Nurturing Collaboration and Creativity

SHARED’s members — and there are 60 to 80 of them at any given time — are as diverse as the space that was created to support their aspirations. “We have a pretty broad range of people here,” Marilyn told us. From fine artists to genome sequencing companies and AI companies, to Marilyn herself, who designs women’s motorcycle jackets, there is no shortage of diversity in terms of craft. The common ground is that everyone is a small business, and everyone is passionate about what they do. It’s this kind of fire that is contagious amongst the members and fuels their work.

The common ground is that everyone is a small business, and everyone is passionate about what they do.

“I like being around people who are really passionate about what they’re doing,” Marilyn told us earnestly. “There aren’t people here who just come here because it’s their job. Everyone’s working on something that they feel very strongly about, and that’s really nice, to be around that kind of energy. ”

History of SHARED

“I think it’s pretty common for people to share a space with two or three other people — I mean people do that in their living situations as well,” Marilyn said when we asked how she got the idea of SHARED. Indeed, sharing space is normal and even necessary, as anyone who lives or works in an expensive city like SF will tell you.

Marilyn, working at SHARED

But when Marilyn conceived of the idea of SHARED, she was thinking about more than just saving money. Recognizing the invaluable synergy that comes from working with other creative people, she wanted to establish and maintain a reliable and affordable space for that.

Getting Support For Her Vision Wasn’t Easy

It was difficult in the beginning, though. To create the special space she envisioned, she had to have a building she could call her own. And to buy the building, Marilyn had to apply for a large loan. The application involved securing multiple positions on the loan, both from a local bank and CNote-partner, and mission-based lender, CDC Small Business Finance. “We went through a lot of hurdles for that,” Marilyn confided. “Shared workspaces, they’ve been around for a decade or two…but more risk-averse businesses like banks, like the federal government — they’re not really in on the latest business structures.” It took a lot of convincing to get the bank and SBA to believe in SHARED enough to invest in it.

“That’s where the CDC [CNote-partner CDC Small Business Finance] came in, because they were packaging the loan for the SBA,” Marilyn explained. With the help of CDC’s research alongside her own, Marilyn was able to help The SBA see the relevance of shared workspaces and to secure funding. In 2010, she purchased 739 Bryant Street; and after renovating the place for 90 days, she turned her vision into a reality.

More of a Community Than a Business

Now it’s fair to say that in the past 7 years, a unique little community has emerged out of SHARED. Unlike other shared workspaces, it has become something more than a workplace to its members. “It’s kind of like an extension of their home. They’ll leave their computer and their phones out, and they’ll go grab a bite to eat. It’s very familiar….I think maintaining a safe space for people to feel comfortable is very important,” said Marilyn when we asked her what she did to make her clients happy.

Another thing she does is hand select her members, looking for people who are both “professional, meaning that they’re serious about whatever business idea they have,” and a good fit for the existing members. Her carefulness has ensured that SHARED remains a place of synergy both professionally and personally, and it has really paid off for her and her members. “I love just seeing people meeting other people…Often, members will then collaborate and work on projects together. Or they become friends…” One member even officiated another’s wedding.

SHARED’s members are so close, that forced events like happy hours aren’t even needed. “I think people didn’t think they were very necessary…which is kind of a good thing” Marilyn mused. “They feel comfortable talking to someone outside of a structured mingling time.” Why bond in a bar when mutual passion, hard work, and a general openness and friendliness has already bonded you in the workplace?

Conclusion: 1 + 1 = 3

Just as this proposition describes what’s going on within SHARED, it describes what’s going on in the world of impact investing. Everyone has something to bring to the table. However small, it can make ripples of impact for others. Marilyn conceived an idea to create a space that will help small businesses get on their feet and thrive and the impact has been tangible and positive. CNote’s partner CDC, by offering their time, research, and innovative thinking did their share. And every small business that has gone through SHARED will, in turn, make their own impact.

You can make our own impact and help write more stories like SHARED’s by investing in CNote. Learn More.

Learn More

By Change Makers Series

Change Makers Interview: Lenwood V. Long Sr. of the Carolina Small Business Development Fund

October 2019 Update: Mr. Long is no longer with Carolina Small Business Development Fund (CSBDF). He was recently recognized for his financial inclusion work by The African-American Alliance CDFI CEOs.

Today we’re excited to share our interview of Lenwood V. Long Sr. He is the former CEO and President of Carolina Small Business Development Fund (CSBDF), a Community Development Financial Institution (CDFI) and statewide nonprofit organization based in North Carolina. The mission of Carolina Small Business is to foster economic development in underserved communities by providing capital, business services, and policy research to support small businesses.

Lenwood was gracious enough to share his vision for community finance and some of the challenges he sees that still must be addressed. Lenwood is an industry Change Maker who has dedicated his career to community finance and increasing financial inclusion. This interview is will give you insight into what truly motivates all the people like Lenwood, who work at CDFIs across the country and are building a more inclusive and fair economy one community investment at a time.

Well, I grew up in rural North Carolina, a little place called Bayboro, North Carolina. Proud to be a product of that rural America, and I grew up in time of segregation. I grew up at a time where I never thought a guy from Bayboro, North Carolina, would not only be a CEO of a community development financial institution. But really never imagined that I’d be in a position to help people fulfill their dreams, realize their aspirations, and be an advocate for change. And this whole movement towards decreasing the wealth gap that we see in this nation among people of color. And I’m excited to be on this mission.

Lenwood V. Long, Sr. (CSBDF)

In his role as President/CEO of CSBDF, Lenwood has led the organization through a period of transformational growth. In 2009, under his leadership, the organization went through a strategic shift and rebranding, establishing its direct small business lending program. Within five years, loan volume totaled over $30 million.

Lenwood has more than twenty-five years of experience in community economic development, human resources, and business management. He has held leadership positions in a variety of organizations, including statewide economic and community development agencies, national consulting firms, and nonprofit organizations.

Lenwood’s professional accomplishments are rivaled by his personal achievements, having served in the United States Army (Viet-Nam Combat Infantry Paratrooper) and received an Honorable Discharge as Sergeant (E-5). Lenwood has also has served as a bi-vocational Senior Pastor of New Bethel Baptist Church in Rolesville, North Carolina since 1996. In 2016, Lenwood was awarded The Order of the Long Leaf Pine. This is among the most prestigious honors awarded to North Carolinians who have made a significant impact through their exemplary service to the state and to their communities.

CNote and CSBDF recently announced a partnership where CNote will serve as a capital source for CSBDF’ as they continue to provide loans to underserved small businesses across North Carolina. The entire CNote team is extremely excited to partner with Lenwood and the Carolina Small Business Development Fund team. Now, on to the interview.

If you’d like to listen to the full audio of the interview, click play below. Additionally, you can skim the interview highlights below or the read entire transcript below the highlights.

 

Interview Highlights

About Carolina Small Business Development Fund:

Carolina Small Business Development Fund is a small business lender. Our mission statement is to provide capital business services and policy and research to support small businesses. So the focus is really upon small businesses throughout the state of North Carolina, although we do provide some lending in South Carolina. So the main focus, small business, augmented by business services with policy and research as a focal point to become a current leader as relates to small businesses, especially in North Carolina.

And the communities that CSBDF serves:

A way to look at it is we are a very diverse lender. If you look at our lending across the state of North Carolina, you’ll find that roughly 57% minorities, or people of color. I’m very pleased that over 38% of our lending is to women entrepreneurs, gratified that 18.5% of our lending goes to veterans across this state, as well as about 41% to startups. And let me sort of say that the reason startups are so high is that we are an SBA approved community advantaged lender, which is a pilot program developed by SBA to allow CDFIs to participate in the R7A program. But they renamed it because of the focus to underserved community advantage. And then about 34% are to low income. So as you can see, the lending is very diverse and has reached that underserved market that typically banks, while strong supporters, do not serve because of [1] the risk level of some of our borrowers, [2] credit issues, and [3] size of loans. Those tend to not be accessible for underserved communities and people of color.

On defining what CDFIs do, they “focus on providing capital or housing support services to underserved communities, and primarily those communities that have a high percentage of poverty, especially persistent poverty. And so the mandate coming from the CDFI fund itself is really serving the truly underserved across this nation. And we’re proud to be a part of our mission and vision, and the vision bringing greater economic opportunity for our people.”

How Carolina  Small Business works to measure the impact of its community lending activities:

We do an impact assessment analysis of our lending through our borrower survey. We even partnered with the Center for Budget and Tax here in the State of North Carolina, in the City of Raleigh, and developed a sort of matrix, a form of looking at indirect impact. We’d say that when you look at multiplying impact, it’s says that for every loan we make there’s an indirect impact in that community. And I think that’s somewhat abstract, but when you begin to look at it from a simpler model that we developed, it’s simply this; as we make loans, those borrowers hire people, so we add to the employment of those communities. Two, that the borrowers, they pay taxes so you’re adding to the revenue base of those communities. And third, those borrowers are people who buy services and goods, which helps the economic ecosystem of that community, and so as we make loans not only are we helping the borrower to move forward, we are actually helping to build the economy of local communities.

On how being so close to the community helps Carolina Small Business better evaluate risk:

I think that’s very important. You’ve raised an important point because one of the things we like to do is get to know our borrowers and our borrowers get to know us. And so it’s not that we can scale and trying to scale the loans approved or the number of borrowers. But our mission is to see those borrowers succeed. And so we want to work with them, exactly where they are and that rating would tell us based upon a number of metrics that we’ve developed to do that. How much and what level of technical system that borrowers need? Because, let’s face it, when you serve in underserved markets, sometimes they may have great business plans, they make cash flow but there may be some management issues they have to deal with. Because you can be good at your industry but perhaps not good at managing, perhaps not good at fiscal management. And so in order to see you succeed, we can assess that. And from that assessment we’ll say that, “Okay, this borrower needs some assistance.” and market that. “This borrow needs some assistance with financial management.” I may be management. And so we can tell a program for that borrower. And I do think larger financial institutions and banks have a sense but they don’t have the time. Their business model is to provide that technical assistance to those borrowers in that category. Banks give you a loan, you’re on your own.

Talking about addressing the core issues of why African-American business owners are underfunded:

For example, one of the things that I looked at, was that I was lending, I saw the denial rate for African-Americans being higher than the other groups we were serving. And I asked the question, “Why is denial so high?” We found out there were four reasons. One was credit, the second was equity, lack of equity, the third was collateral. Equity and collateral sort of go together because it speaks to… And as broad as this societal gap in wealth, if you don’t have any wealth, if you don’t have any capital, you can’t afford to invest any property, invest in loans. The other thing was the business management. So we designed a program to meet those four areas.

On some special initiatives Carolina Small Business is working on related to veterans and historically black colleges:

One is this whole initiative around small business for veterans. We have a special program, and we’re piloting with two other CDFIs, people out of Texas and Main Street Launch out of California, design a national program for veterans around best practices. How do you effectively lend to veterans, and what metrics are you using to measure impact and success, so we’re proud of that. And we also talked to Bank of America about a program that’s in the design stage. The other piece is that I’ve had this strong interest in women entrepreneurship, and so not only do we operate a women business center, but we have a partnership with historically black college and universities to try to use university resources to extend outside of the walls, into local community trying to build a capacity, and we develop a women entrepreneurship center with a predominately black university and the state African-American university and the state.

The Full Text of CNote’s Interview with Lenwood

00:02 CNOTE: Lenwood, I want to thank you for taking the time to talk with us today. We’re extremely excited to have Carolina Small Business as a CNote partner.

00:13 Lenwood: Oh, delighted.

00:15 CNOTE: Excellent. And I was hoping for people that may not understand or know much about Carolina Small Business, can you tell us about it and its core mission?

00:26 Lenwood: Sure. Carolina Small Business Development Fund is a small business lender. Our mission statement is to provide capital business services and policy and research to support small businesses. So the focus is really upon small businesses throughout the state of North Carolina, although we do provide some lending in South Carolina. So the main focus, small business, augmented by business services with policy and research as a focal point to become a current leader as relates to small businesses, especially in North Carolina.

01:19 CNOTE: How long has Carolina Small Business Development Fund been around?

01:26 Lenwood: Great question. Actually, Carolina Small Business Development Fund started in 18… I mean, [chuckle] 18. 1989, as the North Carolina Minority Support Center, with a focus for providing capital, tactical assistance to a community development credit union. And then we rebranded in 2008 as the Support Center, with a primary mission towards small business lending. Later rebranded in 2016 to Carolina Small Business Development Fund. And the reason for the second rebranding was that we felt the Support Center… People were getting it confused. They thought we were a support agency, and so we think the alignment with the new name, logo… Nothing changed in the mission, on the vision. Just an alignment with the name with the mission.

02:39 CNOTE: Can you tell us a little bit about the communities you serve, and kind of your focus or goals?

02:50 Lenwood: Sure. Sure. A way to look at it is we are a very diverse lender. If you look at our lending across the state of North Carolina, you’ll find that roughly 57% minorities, or people of color. I’m very pleased that over 38% of our lending is to women entrepreneurs, gratified that 18.5% of our lending goes to veterans across this state, as well as about 41% to startups. And let me sort of say that the reason startups are so high is that we are an SBA approved community advantaged lender, which is a pilot program developed by SBA to allow CDFIs to participate in the R7A program. But they renamed it because of the focus to underserved community advantage. And then about 34% are to low income. So as you can see, the lending is very diverse and has reached that underserved market that typically banks, while strong supporters, do not serve because of [1] the risk level of some of our borrowers, [2] credit issues, and [3] size of loans. Those tend to not be accessible for underserved communities and people of color.

04:46 CNOTE: You said a magic word in that response, which was CDFI. And you know, I think a lot of people hear that acronym…

04:58 Lenwood: Right.

05:00 CNOTE: And they don’t really know what it means.

05:00 Lenwood: I know, I know.

05:01 CNOTE: And since you’re an expert, can you give us your one or two sentence explanation of what a CDFI is?

05:07 Lenwood: Yes. Yeah, yeah. Well, you know, one of the things that many people… And I think across the nation, they hear this word CDFI and they wonder, “Well, what is that?” Well, actually an acronym, Community Development Financial Institution, that is certified rather by the Department of Treasury to focus upon providing capital or housing support services to underserved communities, and primarily those communities that have high percentage of poverty, especially persistent poverty. And so the mandate coming from the CDFI fund itself is really serving the truly underserved across this nation. And we’re proud to be a part of our mission and vision, and the vision being greater economic opportunity for our people, it sort of captures the served and the underserved.

06:18 CNOTE: Excellent, yeah.

06:20 Lenwood: Sure.

06:21 CNOTE: So, you talked a little bit about the community you serve, and I was just wondering, when you make these loans do you see kind of secondary effects on the community? And how does that play out?

06:43 Lenwood: Yes. We do a sort of impact assessment analysis of our lending through our borrower survey. We even partnered with the Center for Budget and Tax here in the State of North Carolina, in the City of Raleigh, and developed a sort of matrix, a form of looking at indirect impact. We’d say that when you look at multiplying impact, it’s says that for every loan we make there’s a indirect impact in that community. And I think that’s somewhat abstract, but when you begin to look at it from a simpler model that we developed, it’s simply this; as we make loans, those borrowers hire people, so we add to the employment of those communities. Two, that the borrowers, they pay taxes so you’re adding to the revenue base of those communities. And third, those borrowers are people who buy services and goods, which helps the economic ecosystem of that community, and so as we make loans not only are we helping the borrower to move forward, we are actually helping to build the economy of local communities. Because in the aggregate across this nation, over 85% are small businesses, so what drives this economy and we cannot forget are really small businesses across this nation. And I think sometimes we forget that, and when you talk about small businesses nationally they always talk about regulatory reform being the answer, but no, it’s access to capital that’s being the number one issue. And two, when you look at, when you make a loan it’s more than just a loan to a borrower. Think about all those impacts that I referenced in terms of tax, in terms of savings, in terms of spending, and it all leads to what we say a healthy and resilient community. And so that’s the way we sort of spin it.

09:06 CNOTE: Gotcha. No, excellent points you make there. So one thing I was wondering is, the common conception a lot of people have is, when a small business gets a loan from a bank or something, they get a check and then they get a pat on the back and they say “Good luck” and that’s about it. [chuckle] But my understanding is that a lot of these community lenders like Carolina Small Business Development Fund, they also do other things to assure that the small business or entrepreneur succeeds. Can you talk a little bit about how you work with the people that you serve?

09:44 Lenwood: Sure, sure. One of the things that… We have this premises, that we make a loan, we want to see that borrower’s success story. As a part of that we develop a, sort of a risk rating of every loan we make, and with that risk rating we will establish whether or not this is a borrower that we need to be supportive through our business services, technical assistance support, and so with that we are able to sort of follow our borrower from the time that borrower receives a loan, and to check on that borrower to make sure that they are meeting not only their target goals, but also they’re not experiencing any problem with markets and cash flow, because at the end, we certainly want to see the borrower pay us back, but more importantly we want to see that borrower succeed. Because when you think about it, when that borrower succeeds, look at the economic benefit it plays to that local community. And so it’s more than just giving a borrower a loan, it is really being that partner and trusted business guide with that borrower.

11:08 CNOTE: Excellent. So kind of a shared success model where if they do well and then…

11:13 Lenwood: Yeah, right, right, right. So the borrower does well and you look at the model providing capital to small businesses throughout the state, as those borrowers succeed and pays back, that money is recycled for lending to other borrowers. And so it’s a revolving loan fund, and when revolving say that it turns around, and that’s important for us because we want to see you not only succeed, but help other borrowers in paying back the loan that you received from us.

11:56 CNOTE: Excellent. So you used a word that stood out to me. You used the word risk in your answer before, and I wanted to ask you a little bit about riskiness of loans. And do you think that as someone, as a community lender, as someone who’s really close to the community and the people you serve, does that give you an advantage over big banks as far as understanding the riskiness of your borrowers and the loans that you may issue.

12:26 Lenwood: I do. I think that’s very important. You’ve raised an important point because one of the things we like to do is get to know our borrowers and our borrowers get to know us. And so it’s not that we can scale and trying to scale the loans approved or the number of borrowers. But our mission is to see those borrowers succeed. And so we wanna work with them, exactly where they are and that rating would tell us based upon a number of metrics that we’ve developed to do that. How much and what level of technical system that borrowers need? Because, let’s face it, when you serve in underserved markets, sometimes they may have great business plans, they make cash flow but there may be some management issues they have to deal with. Because you can be good at your industry but perhaps not good at managing, perhaps not good at fiscal management. And so in order to see you succeed, we can assess that. And from that assessment we’ll say that, “Okay, this borrower needs some assistance.” and market that. “This borrowers needs some assistance with financial management.” I may be management. And so we can tell a program for that borrower. And I do think larger financial institutions and banks have sense but they don’t have the time. Their business model is to provide that technical assistance to those borrowers in that category. Banks give you a loan, you’re on your own.

[chuckle]

14:21 CNOTE: Yeah, and that can be challenging.

14:26 Lenwood: It can be, but look at… I wanted to draw this parallel. Look at who banks lend to, small business-wise. They are probably a more seasoned business, more likely not to be a startup, more likely to have been in business, more likely to have demonstrated the capacity to repay, more likely to have demonstrated the capacity to manage and perhaps more likely not have credit challenges. Look at the borrowers that community financial institutions, or CDFIs, typically lend to. Those borrowers are typically underserved, they did not meet the metric requirements of banks, and more often than not, perhaps do not have as much management experience. So they need some independent, undergirding to help them to be successful in the work they do.

15:34 CNOTE: Gotcha, and then that’s where lenders like Carolina Small Business Development Fund and other CDFIs try to come in and, not only help provide capital.

15:45 Lenwood: But also the business services or technical system, which is vital to the success of those small businesses.

15:54 CNOTE: So a little bit earlier, you were talking about this imbalance in capital flows to underserved communities. And at the end of last year, December of 2017, there was a study that the New York Federal Reserve did that something like only 20% of small businesses with employees are owned by women. And then there’s obviously a lot of other statistics related to minority business ownership. In your mind, what are some of the big things we can do as a society to work out these imbalances?

16:32 Lenwood: Great questions. I wanna draw your attention to a commission study that Wells Fargo did. And they did it looking at access to capital, and they found out and they didn’t have to hire researchers. The research firm that did this study, that people of color, primarily African-Americans, Hispanic, Latino, women, and veterans tend to have difficulty accessing capital. Take a rocket scientist to figure that one out, right?

[chuckle]

17:14 Lenwood: And so they developed a program around addressing those disparities. And I think that while they were very effective in doing that, they missed it in some categories. Mainly in that CDFIs, particularly those that are managed by people of color, tend to suffer from some of the same problems and issues that the borrowers they have, that’s around access to capital. And so when you look at those groups, African-Americans, Latino, Hispanic, and women entrepreneurs, and veterans, they do tend to have challenges as relates to accessing capital.

18:05 Lenwood: I think if you would slice each of them out, that they would face different challenges. For example, one of the things that I looked at, was that I was lending, I saw the denial rate for African-Americans being higher than the other groups we were serving. And I asked the question, “Why is denial so high?” We found out there were four reasons. One was credit, the second was equity, lack of equity, the third was collateral. Equity and collateral sort of go together because it speaks to… And as broad as this societal gap in wealth, if you don’t have any wealth, if you don’t have any capital, you can’t afford to invest any property, invest in loans. The other thing was the business management. So we designed a program to meet those four areas. But, in terms of what the larger society can do, and pay attention to trying to… We sort of gloss over these indices, and we do not meet them head on with this whole issue of capital, specifically targeted for the groups that have difficulty accessing capital. We dance all the way around it, but we never directly face it. And until we directly face this issue, we will always be talking about this disparity, between accessing capital for these groups that have that difficulty.

20:03 CNOTE: Absolutely, that’s a great point. And so obviously people like yourself, and funds like Carolina Small Business, certainly play a big role in that. But I wonder if some people don’t fully understand, or maybe don’t appreciate the work you do. I was wondering if you face or notice any common misconceptions about community lending, and is there anything you’d like to clear up, or just clear the record of?

20:37 Lenwood: Yeah, I think you raise important issues. There is a misunderstanding. I think the misunderstanding comes from misinformation, and time to understand these challenges that CDFIs face across this nation. We look at them as being another vehicle to just provide capital for the housing, lending, some other areas, as a support organization. Not as an organization that’s really helping the economy, as well as people within underserved communities. And so, instead of valuing that contribution to the larger economic impact, we tend to devalue the work. And it’s manifested in public policy, where you have public policy around allocation of resources that literally does not put money in for CDFIs, and a proportion needed to address some of the great problems facing underserved communities.

22:00 Lenwood: We put money in infrastructure, we put more money in symphonies than we do in CDFIs, serving the economies and people, these various communities. And so if you look at nationally, for example, and the CDFI fund itself, where the administration is trying to cut funds out. And when you cut funds out to allow agencies that’s been working for years trying to address inequality, then you’re making a statement that you’re devaluing the work of these CDFIs. I think one, there’s not enough time to understand the work we’re doing, the contribution, and building a strong ecosystem within local communities. And thirdly, more importantly, we tend to devalue the work they do, and not value the contribution in building access to capital, building strong communities, whether it’s in housing or job creation. That’s my platform. You hit a nerve for me.

[laughter]

23:19 CNOTE: Well yeah, you’ve got it down. You’ve certainly convinced me. And I think one thing that maybe some of our policy makers maybe overlook is that my understanding, and maybe you can speak to this a little bit more eloquently than I can, but I think the return on investment is extremely high for these programs. So if you’re at building a freeway, or maybe the RIO is higher for some these CDFI support projects, right?

23:47 Lenwood: Yeah. Well, how do you measure that? And I don’t think people ever think about the measurement of return on investment. When you look at a number of housing projects in underserved communities, that that would not have been there unless that CDFI had put it there. Or the borrower whose life has been made much more fuller by resource of capital to start a business. And then you look on the return investment about the money you put in and the benefit that goes in those local communities. And I don’t think we really have accurately captured the total return on investments within local communities, or the return on investments that CDFIs yields to the greater economy across this nation and the various communities they serve in various state. It’s just huge. When you look at some CDFIs that are in new market tax credit, that are scaling businesses. If you look at CDFIs that are doing housing projects, that are creating new housing alternatives for low income neighborhoods. Look at CDFIs that are providing lending like Carolina small business. Some [small business owners] who had dreams and are able to fulfill their dreams, that’s why we call ourselves ‘being dream catchers’ because, we think, that one of the things we do is help people realize their dreams. So, you brought up an interesting point, that is the return on investment, very important, underestimated, not accurately captured.

25:46 CNOTE: Yeah. So, my interview with you today is part of our Change Maker Series. So, I can’t let you off the hook, I wanna ask you some questions about yourself.

26:00 Lenwood: Sure.

26:01 CNOTE: And for those listening, just to remind everyone, we’re talking to Lenwood V. Long, the CEO of the Carolina Small Business Development Fund. But I wanted to ask you a little background, where did you grow up, and did you ever think that you’d be doing what you’re doing today?

26:20 Lenwood: Well, I grew up in rural North Carolina, a little place called Bayboro, North Carolina. Proud to be a product of that rural America, and I grew up in time of segregation. I grew up at a time where I never thought a guy from Bayboro, North Carolina, would not only be a CEO of a community development financial institution. But really never imagined that I’d be in a position to help people fulfill their dreams, realize their aspirations, and be an advocate for change. And this whole movement towards decreasing the wealth gap that we see in this nation among people of color. And I’m excited to be on this mission. And I must confess, another part of me is ministry, that I’m an ordained minister and a pastor at church, so I’m not ashamed of that. And so that’s another area that I never thought I would be in but I believe in this saying of “Divine destiny”, and so I think both of ’em goes hand in hand. This mission work, I call this mission work, of helping the underserved as well as spiritually nurturing people as well.

27:56 CNOTE: Oh, that’s excellent, really inspiring. Obviously, you’re doing fantastic work, it looks like kind of with everything you touch. My understanding is that Carolina Small Business Development Fund is done extremely well under your leadership, and I was just wondering if there were any specific accomplishments that you were most proud of personally.

28:23 Lenwood: Well, again, yeah, I’m really proud of the team that I’ve been blessed to help me carry out this mission of serving the underserved, through the organization that we’ve been blessed to lead. And the accomplishment for me is this team spirit that we have. And I don’t take credit for anything. Everything I’ve been able to accomplish is through a great team that I’ve been blessed to have. So I guess I would frame the accomplishment around this team that we’ve assembled to make this impact in local communities across the state.

29:19 CNOTE: That’s a great way to look at it. You know, it takes a big group of people to do big things, and it sounds like you guys are doing that there.

29:28 Lenwood: Yeah, it does. It does. It does. It really does. And other thing is, I’ll always, I’m proud of being a Vietnam veteran, that I can also inspire other veterans to go for it. Try to follow your dream, follow your passion, be risk takers, make things happen. So, never allow whatever you are scared of be your destiny. Try it, move it. You feel it, move on it.

30:05 CNOTE: Excellent. Yeah, well that’s great advice. Actually, that makes me want to ask you another question I like to ask people. If you could go back in time and give twenty-year-old Lenwood some advice, [chuckle] what would that look like?

30:24 Lenwood: Oh, man. It would be, “Lenwood, grow up.”

[chuckle]

30:32 Lenwood: Yeah. You know what, I would tell him, “Follow your passion around where you would like to go.” Because one of the things you understand, Lenwood at 20 years old was fighting a war and had no idea why he was fighting that war, and I learned this out of survival in a war setting. And that taught me life lessons in many ways. Left some scars, sure, but it taught me some things, too, that I will forever cherish about life.

31:12 CNOTE: Wow. Yeah. I was gonna ask you, you talked about being a veteran and if I recall correctly, I think you guys may be doing some special initiatives, or is there anything…

31:26 Lenwood: We are, we are.

31:28 CNOTE: Yeah, so what are those initiatives that Carolina Small Business Development Fund’s working on right now?

31:34 Lenwood: Well, we have a… There’s two. One is this whole initiative around small business for veterans. We have a special program, and we’re piloting with two other CDFIs, people out of Texas and Main Street Launch out of California, design a national program for veterans around best practices. How do you effectively lend to veterans, and what metrics are you using to measure impact and success, so we’re proud of that. And we also talked to Bank of America about a program that’s in the design stage. The other piece is that I’ve had this strong interest in women entrepreneurship, and so not only do we operate a women business center, but we have a partnership with historically black college and university to try to use university resources to extend outside of the walls, into local community trying to build a capacity, and we develop a women entrepreneurship center with a predominately black university and the state African-American university and the state. And then we’re doing another, sort of piloting one with the YWCA. We call it the Coast of Veteran Women’s Center, and it’s all around trying to be a leverage and partnership with underserved sectors that we need, and this is a passion area of ours and our HBCU initiative, that is working with historically black colleges and universities throughout the state, piloting programs where you can have sustainable impact in local communities. And another trademark is the Innovation Entrepreneurship Center that we developed with Shaw University, which is a historically black college and university. Sort of unique, sort of different, but it is outside of the box thinking to address disparities that we saw within local communities. We see a need and we are brazen enough to address it. And we’re not afraid to do some things that are different.

34:14 CNOTE: Yeah, well, I think for big problems you have to take creative approaches, so it sounds like you’re testing everything you can and trying to find…

34:22 Lenwood: Oh we can. Yeah, you’re right. You’re right, absolutely right. We’re proud of those initiatives.

34:29 CNOTE: Excellent. I was gonna say that all of these initiatives you’re doing sounds like a big undertaking, but I was wondering too, if you had any big goals for the next five to 10 years for things you’d like to do with Carolina Small Business Development Fund, or…

34:47 Lenwood: Well, one of the great challenges of CDFIs, and especially CDFIs managed by people of color, is sustainability. And my goal over the next two or three years is trying to develop equity for Carolina Small Business Development Fund, to increase its sustainability ratios, to decrease the dependence upon grants and from state or federal government to survive. Because as we know, that with government being less responsive to community needs, then there is this reluctance, again, policy decision, this reluctance to invest in community development financial institutions, especially those managed by people of color. And you hear a lot of folks, “I’m not racist,” but their policies have racial impact because they are designed to not increase the wealth creation opportunities in local communities that are in need, but they decrease and devalue those communities. I keep using this word ‘devalue’ because I think that’s what’s happening. We devalue the work of CDFIs, we devalue small communities, underserved communities, by not investing in them. And so, this is this, we talk about wealth gap. The gap between investments is still strong in this country and in many states. While we’re saying politics sort of being oblivious to these community needs, and it’s racial politics as far as I’m concerned, that’s another form of gerrymandering that we don’t even talk about. You got mental soapbox. [laughter]

37:04 CNOTE: Hey you’re really close to these issues, and you’re touching them and seeing how that impacts lives on a daily basis, and I think it’s good to share your perspective with people. Like me, I’m in California and I don’t necessarily see what you see, so it’s always good to get other point of view. I don’t wanna take too much of your time, but I do have a couple, kind of practical questions that I wanna end on. And also, if you have anything to add, please. It’s great talking to you, but I think, one thing I wanted to ask you is, you talk about CDFIs needing help and support, and so, for those looking to support CDFIs like Carolina Small Business Development Fund and other CDFIs across the country, what recommendations would you make to someone, and how they can help?

38:01 Lenwood: The recommendation that I make is, look at the mission of CDFIs such as Carolina Small Business Development. Sort of meditate on that mission. Chew on that mission for a moment. And then, when you go through the vetting process, vet not only the financial information that rightfully you need, but flavor that vet and… With the fact that these organizations are serving people that would not be served but for. And that but for is very important. But for the services Carolina Small Business Development Fund, over the past eight years or nine years, over 600 businesses probably would not have been served. For the moment, $44 million would not have been disbursed to small businesses across the state but for Carolina Small Business Development Fund.

39:22 Lenwood: And so, the fact that it provided loans to individuals and categories and sectors that are unmet, and when you vet that temper it with all those factors, and perhaps your vetting would be a little different. I understand that the risk rating that you have to do. I understand the responsibilities, but I don’t think there’s enough attention paid to the mission and the work they’re doing. Sometimes they get overshadowed by the fact that, “Can they pay back?” Right? We get that. We understand that. Wanna be responsible for that, but I guess there’s a holistic approach that I think that need to be taken.

40:19 Lenwood: The other thing I would say is this, CDFI managed by people of color tend to, and I’ve said this before and I keep saying it, tend to suffer from some of the same problems that the borrowers they serve so well, suffer from, and that is access to capital. If you look at the balance sheet of CDFIs managed by people of color, and look at balance sheets of those that are not people of color, I guarantee you, if you look at the time they started and the time they are now, most of them would be great or larger, would not suffer from capital needs as much as CDFI managed by color. And so again, there’s allocation of resources to CDFIs, there’s inequity. And so I don’t think that has been addressed. We say we’re committed to CDFIs, but not really to all of them in the same magnitude. And that’s, again, something that, nationally, that I’m addressing and I’m not bashful about addressing it.

41:37 Lenwood: I’m convening along with couple other people, a group of CDFIs that led by African Americans, to begin to address this issue and looking at all alternative financial. That’s why we invited Catherine to be a presenter at this meeting, so that CDFIs managed by people of color, African-American, understand and we understand that what we go through the [capital acquisition process], we get vetted out many times. We are not looked at with the same lenses as other CDFIs. So that’s saying a lot there. But those things that I would ask people to look at when they look at CDFIs like Carolina Small Business Development Fund. Look at that mission and meditate on that.

42:35 CNOTE: Excellent point about viewing the issue holistically and looking at everything that you can look at. And just to clarify, if someone’s listening, Lenwood’s talking about Catherine Berman, she’s the CEO of CNote, which is a financial technology company that is working to be a new capital source for CDFIs, like Carolina Small Business Development Funds. That’s a partnership we’re really excited about. And hopefully can be a long-term source of capital and help you guys do the great work that you’re doing. One more practical question I have for you, is let’s say someone in rural North Carolina happens upon this interview somehow, or somewhere else in the country. And they have a small business idea. And they’re an entrepreneur. And they wanna secure a loan. What do you tell them, or what kind of advice can you give to them to embark on that journey and make it more plausible that they end up succeeding in their mission?

43:45 Lenwood: If they’re a small business and happen to run across this interview and become intrigued by what they’ve heard and wanna fulfill their dreams, I’ll say what, go for it. You can go to our website, Carolina Small Business Development Fund. Just put that in and it’ll pop up, and you’ll see on our website how to apply on each page at the top of the page. That is how to apply for a loan. And when you tap that, click that button, it will take you through the application process. Or more likely, we have regional satellite offices throughout the state. And a few in the Charlotte area, there’s a satellite office, a few in Nashville, a few in Fayetteville, a few in Greenville. They tend to work the region. And so go to that website. And you will find it. And if all else fail, I tell them to call me. And I will certainly put you in the right direction. And you’d be surprised at the number of people that call me or email me. And I don’t know how they get my email address, but they get it.

[chuckle]

45:12 Lenwood: But one thing they can always say, Lenwood responds.

45:18 CNOTE: Nice.

[chuckle]

45:20 CNOTE: Well, I don’t want to take up anymore of your time, Lenwood. It’s been an absolute pleasure to talk with you and learn more about you and Carolina Small Business Development Fund and all the great work that you’re doing. And on behalf of everyone at CNote, we’re really excited to be working with you and helping you along with your mission, because you’re really where the rubber meets the road. And you’re doing amazing work to increase economic equality in the United States.

45:49 Lenwood: Well, I hope I was able to one, provide you with kind of information you need about Carolina Small Development Fund. And two, perhaps you got a glimpse of me as a person as well.

46:02 CNOTE: Great. Well, thank you so much, Lenwood.

46:05 Lenwood: Thank you.

==End of Interview==

Conclusion

Learn more about Lenwood and CSBDF.

Visit CNote and learn how you can use your dollars to support the mission of CDFI’s and change makers like Lenwood as they work to build a more inclusive economy across America.

By Borrower Stories

INCAUSA – Indigenous Social Entrepreneurship meets community lending

Incausa – In the cause of others.

Today, CNote is profiling Incausa, and its co-owners, Vinicius and Carolina. Together, they’ve built a company that sells unique goods across the globe but also supports indigenous artisans by selling their crafts and returning 100% of the proceeds to them. Incausa received a loan from a CNote partner that allowed them to scale their company without sacrificing their social mission. 

Read More

By CDFIs

What is a CDFI? – Community Development Financial Institutions Explained

What is a Community Development Financial Institution (CDFI)?

Updated July 2021

Community Development Financial Institutions, more commonly referred to as CDFIs, are private sector, primarily nonprofit, financial institutions that provide loans and other financial resources to Low to Moderate Income (LMI) and BIPOC communities that are often underserved by traditional financial institutions. 

CDFIs are federally certified entities. That certification comes from the CDFI Fund, an agency within the U.S. Department of Treasury, which explains that “certification is the U.S. Department of Treaury’s recognition of specialized financial institutions serving low income communities.” The fund has certified more than 1,200 CDFIs and these institutions exist in every state and the District of Columbia, serving rural, urban, and native communities while sharing the primary mission of promoting community development. 

CDFIs have roots in the civil rights, anti-poverty, and other progressive movements and can trace their origins to local credit unions and banks that sprang up to address predatory or exclusionary lending practices like redlining in communities across America. They believe in economic justice for all people and are federally regulated to focus their lending and business development efforts in low-income and underserved communities.

This article will explain how CDFIs work, their history, and will contextualize their positive impact on society.

If you’d like to dig deeper we’ve also created a more quantitative industry overview, which you can download and read via this link: CNote Whitepaper – Overview of the CDFI Industry (pdf).

Since CDFIs are a fundamental part of CNote’s impact investment offerings, and we make it easy for anyone, from corporate investors to individuals, to invest in CDFIs, understanding CDFIs will provide a more complete picture of the positive impact an investment in CNote has on communities across America.

Preamble: The hard work CDFIs have done over the last two decades.

Tanesha Sims-Summers (far right) is the founder of Naughty But Nice Kettlecorn Co. She received a $50,000 loan from TruFund to complete the build-out of a food truck, which allowed her to attend popular events across Alabama to sell her gourmet kettle corn.

Historically, CDFIs are an asset class that is undervalued despite their catalytic impact in communities. The Brookings Institute had the following to say when looking back at decades of historical data on CDFIs:

“CDFIs have succeeded by all obvious measures. A recent sampling of CDFI performance found that 81 CDFIs managing $1.8 billion in assets had provided more than $2.9 billion in financing. They did this with a 1.8 percent cumulative loss rate, consistently low delinquencies, and no losses of investor principle.”

Community Development Financial Institutions (CDFIs), the basics.

CDFIs exist to increase wealth building opportunities for LMI populations and ultimately reduce the wealth gap. They provide loans, financial services and educational resources to those left out of the financial mainstream. CDFIs put a priority on enriching their community over enriching their shareholders and focus on supporting economic growth at the community level, usually by financing small, minority-owned businesses, microenterprises, affordable housing, nonprofit and volunteer organizations, and services essential to revitalizing low-income neighborhoods. 

Accordingly, a CDFI’s success is measured not only by their growth and financial performance but also by their impact in underserved communities, including increasing access to capital for minority and female entrepreneurs, new job growth and retention, the creation of affordable housing units and availability of affordable consumer loan products. 

Typically, CDFIs come in four different forms, banks, credit unions, development loan funds, and venture capital funds. Each of these four institutional models serves a different part of the community and may have different risk profiles, legal structures, and targeted borrowers.

Ebony Harris, center right, received funding from a CNote partner CDFI. Through her learning center, In Good Hands, she has served families in Jackson, TN throughout the pandemic by providing childcare and support so essential workers in her community could continue to work.

Filling a funding gap.

CDFIs provide financial services and products to individuals and communities that often do not qualify for services by the standards of mainstream financial institutions. These can be individuals that have nontraditional credit profiles and limited assets, younger borrowers with a shorter financial history or previously unbanked groups. CDFIs frequently recognize that living outside the economic mainstream does not make one uncreditworthy. When assessing people and places that have been shut out from mainstream financial tools like FICO scores and home appreciation, CDFIs consider alternative, though no less predictive, underwriting approaches like savings accumulation rates and history of rent and utilities payments. 

It should be noted that despite how CDFI underwriting criteria may diverge from a traditional bank’s underwriting criteria, the Opportunity Finance Network (OFN) and Wells Fargo reported in “Innovations in Underwriting” that “innovative underwriting strategies by CDFIs don’t undermine risk management or portfolio quality. Rather, the new strategies analyze past and current portfolio activity to inform new practices.” Without access to affordable flexible capital, these groups’ ability to generate economic growth remains limited. CDFIs, by making their lending activity more inclusive and supportive of their borrowers, are including underserved groups in the financial mainstream. 

The loans that CDFIs make have a tangible impact on their local community. Funds are used to support small businesses, develop affordable housing, build community facilities, and launch or expand other community programs. 

As noted by Vice President Kamala Harris on June 15th, 2021 when she addressed the nation to announce federal relief funding for small business via a national network of CDFIs, “Community lenders understand the merit in providing access to capital directly to communities, and because they do they add value to those communities, and by extension our entire nation.” 

The Community Development Financial Institutions Fund (CDFI Fund), which will be discussed further below, explained the history and the need for CDFIs in more detail:

Community Development Financial Institutions—or CDFIs—emerged in response to a lack of access to responsible and affordable credit and capital in minority and economically distressed communities. The CDFI “movement” took shape in the 1970s with the passage of the Community Reinvestment Act, which encourages financial institutions to meet the needs of all sectors of the communities they serve. Amid growing concerns about the social consequences of investment decisions made by the financial services industry on the nation’s low-income communities, early CDFIs began filling a niche by providing capital and credit in areas that are often difficult for traditional financial institutions to serve. (source)

One example of a successful CDFI with transformative impact is Black Hills Community Loan Fund, a Native CDFI dedicated to creating financial opportunities for economically disadvantaged families who aim to strengthen their financial future in the Black Hills Region of Rapid City South Dakota. With the Native CDFI designation, 51% of an organization’s clientele has to be Native American. BHCLF’s Executive Director estimates that their clientele is coming in at 90% Native American. In Rapid city 10% of the population overall is Native American, and within that population, more than 50% live below the poverty line. BHCLF’s programmatic offerings are centered around financial education, mentorship for entrepreneurs, first-time homeownership, and youth outreach in addition to its lending. You can read more about their impact here.

Executive Director Onna LeBeau (far right) and her full staff for the Black Hills Community Loan Fund

Looking again at the Brookings Institute’s comprehensive retrospective on CDFIs, Taking Stock: CDFIs Look Ahead After 25 Years of Community Development FinanceBrookings found that “CDFIs have helped prove several things, many of which now constitute mainstream market thinking.” Those included:

  • “that financing women and minority homeowners and business owners is not only possible but profitable, and that race and gender are not reliable indicators of financial performance”
  • “that conventional ideas about managing financial risk have changed and therefore will change in response to evidence that the un-conventional is possible”
  • “that managing risk in non-financial and non-traditional ways (such as intensive technical assistance) can work”
  • “that unconventional financial customers are important to conventional financial service companies because they are future customers and solid assets,” and
  • “that community-centered groups can organize capital, manage it responsibly, pair it with organized people, and create measurable changes in communities.”

The legal framework behind CDFIs

Individual CDFIs are certified by The Community Development Financial Institutions Fund (CDFI Fund). The CDFI Fund is an agency within the U.S. Department of the Treasury that was established by the Riegle Community Development and Regulatory Improvement Act of 1994.

The CDFI Fund’s mission “is to expand economic opportunity for underserved people and communities by supporting the growth and capacity of a national network of community development lenders, investors, and financial service providers.” You can read more about the CDFI certification process here. CDFIs, despite being certified by the CDFI Fund, are non-government entities. CNote only invests money with CDFI-Fund certified institutions.

CDFIs, which are certified by the CDFI Fund, then go on to make loans throughout their local communities. The CDFI Fund summarized its model as follows:

The CDFI Fund supports the mission-driven financial institutions working on a local level that know their communities best. Financial institutions that become certified by the CDFI Fund are eligible to apply for the comprehensive services it offers—including monetary support and training to build organization capacity. The CDFI Fund’s model is competitive and each of its programs provides CDFIs with the flexibility to determine the best use of limited federal resources in their community.”

(source)

The aim of the CDFI Fund “is an inclusive economy: an America where all citizens have the chance to participate in the mainstream economy.” CNote supports this goal by driving investor capital to these CDFIs, allowing them to expand their impact and fulfill their mission of financial empowerment.

The economic impact of CDFIs, and the CDFI Fund.

CDFIs have a significant impact on the economic growth of the United States. Nationwide, the CDFI industry manages more than $222 billion, creating jobs, affordable housing, financial health, and opportunity for all. While the focus of CDFIs may be on their local communities, these local activities can have a real impact on the broader economy. 

In 2016 CDFIs provided over $3.6 billion dollars in financing to underserved communities (source). While the focus of CDFIs may be on their local communities, these local activities can have a real impact on the broader economy. Here are the 2016 results as provided by the CDFI Fund:

In fiscal year 2016 alone, CDFI Program awardees reported that they provided $3.6 billion in financing to homeowners, businesses, and commercial and residential real estate developments. These developments include the construction of community facilities in communities that might not otherwise have these amenities. In addition, CDFI Program awardees financed over 13,300 businesses and provided more than 427,000 individuals with financial literacy or other training. Similarly, in 2016, over $3 billion in loans and investments were made possible under the New Markets Tax Credit Program, with over 74 percent of the loans and investments made in Severely Distressed Communities. This critical financing contributed to more than 10,000 jobs and an estimated 26,000 construction-related jobs; and resulted in more than 600 affordable housing units, 10.1 million square feet of commercial real estate, and 5,500 businesses receiving financial counseling or other services.

(source)

According to the Opportunity Finance Network (OFN), a network of CDFIs, through its fiscal year 2018, its member CDFIs provided more than $75 billion in lending. This led to the creation or maintenance of 1.56 million jobs, the start or expansion of 419,150 businesses and microenterprises, and the development or rehabilitation of over 2.1 million housing units and 11,592 community facility projects.

This data shows just how concrete of an impact community-focused lending can have on the broader economy. These investments in small businesses and community development lead to job growth and economic prosperity. In summary, CDFIs help deliver economic opportunity to everyone

To that point, this video illustrates the kind of opportunity CDFIs provide to borrowers:

 

In addition to capital, CDFI’s differentiate their success and impact via technical assistance. They provide tailored support and guidance to the entrepreneurs they support. These CDFIs know the common issues small businesses in their communities face, and they can help them overcome obstacles to grow and become sustainable entities that create jobs and increase the tax base. 

An example of this local expertise and guidance was the ongoing support that Access to Capital for Entrepreneurs, ACE, was able to provide to budding franchisee Felicia Parks. Felicia, a veteran, decided to open a Jimmy John’s store in Atlanta with her sons but being a first time business owner, she needed some help. Initially, ACE was able to assist Felicia with her business operations via a business coach; however, when COVID-19 hit, Felicia received a bridge loan from ACE to cover operating costs until she could secure a PPP loan through another lender. Unlike many of the business owners around her, Felicia’s Jimmy John’s never had to close its doors. Now, as she’s preparing for life after the pandemic, ACE has provided guidance and advice to help Felicia navigate the next 12 months, and Felicia is making use of ACE’s online resources on marketing, management, and finance, all geared toward getting her business back up and running after COVID.

Felicia Parks (far right) is the owner of a Jimmy Johns location in Atlanta. When COVID-19 hit the area, her sales dropped 64%. She connected with a CNote CDFI partner, who provided a bridge loan that enabled Felicia to keep her head above water and her store open.

CDFIs do much more than cut a check and walk away. They provide guidance, support, and expertise. They share success with their borrowers. By extension, every investor at CNote shares in the success of our partner CDFIs as they work to increase access to capital for communities in need and create more inspiring stories like that of veteran turned entrepreneur, Felicia Parks.

Are CDFIs riskier because they invest in underserved communities?

The risk profile of CDFIs has been assessed and the reality is that CDFIs do not present significantly more risk than non-CDFI financial institutions. 

CDFIs also have the benefit of certain federal programs like the CDFI Bond Guarantee Program, which provides federal guarantees for bonds issued by CDFIs that make investments for eligible community or economic development purposes. We note that every investors’ appetite for risk can vary. While the research cited below can help guide an investment decision, it is not investment advice; Always consult with a financial adviser to find the investment option that is best for you. 

In late 2014, two independent reports on the CDFI program “found that CDFIs have no more risk than conventional lenders and that they perform nearly just as well as mainstream financial institutions.” The first report, CDFIs Stepping Into the Breach: An Impact Evaluation Summary Report, undertaken by Michael Swack, Eric Hangen and Jack Northrup from the Carsey School of Public Policy at the University of New Hampshire made the following key conclusions:

  • CDFI loan fund lending fills market gaps for key underserved low-income populations;
  • CDFI loan funds deliver between roughly two-thirds to over ninety percent of all loan volume to borrowers living in a CDFI Fund-designated Investment Area;
  • From 2005 through 2012, CRA reported lending decreased while CDFI loan fund reported lending more than tripled, and during the recession, this activity provided a counter-cyclical boost to the economy;
  • CDFI loan funds provide borrowers that may not qualify for loans from mainstream sources with loan terms and interest rates that are still comparable to mainstream products; and
  • The CDFI Fund is the second largest-source of equity to CDFI loan funds after internally-generated funds.

The second report, Introduction to Risk and Efficiency among CDFIs: A Statistical Evaluation using Multiple Methods, conducted by Gregory Fairchild from the Darden School of Business at the University of Virginia and Ruo Jia from the Stanford Graduate School of Business determined:

  • CDFI banks and credit unions were found to have no more risk of financial failure than mainstream financial institutions, even after controlling for the CDFIs’ degree of involvement in the mortgage market during the financial crisis; and
  • Despite serving predominately low-income markets, CDFI banks and credit unions had virtually the same level of performance as mainstream financial institutions.

This research suggests that CDFIs, when managed properly, can deliver returns at or below the risk profile of their non-CDFI counterparts.

CDFIs as Economic First Responders

CDFIs have consistently operated on the front lines of economic disasters such as 9/11, Hurricane Katrina, Superstorm Sandy, Hurricane Harvey, and the 2008 financial crisis, providing economic relief to American communities when they need it most. The Federal Reserve has recognized CDFIs as “economic shock absorbers” that continue to effectively serve their communities even amidst the most catastrophic economic conditions. Not surprisingly, we’re seeing that now in full force with this pandemic and the associated economic fallout.

The COVID-19 health crisis has had a traumatic and far-reaching impact on American communities, especially low-income communities and communities of color where small businesses play an essential role in sustaining economic growth. CDFIs have been essential to recovery as a crucial lifeline for small businesses across the country during the pandemic, and even for decades before.

During the Great Recession, when mainstream finance retracted lending, CDFIs maintained their lending activities and kept capital flowing to low income communities. With consistently low loan loss rates—a cumulative 0.73% from 1999-2017 that outperformed the 0.92% loan loss rate of FDIC-insured institutions in that same time period— CDFI lending has proven effective and successful in changing economic conditions. 

Brighter Beginnings (staff pictured above) is a non-profit which provides vital medical and social services to low-income and minority families in Richmond and Oakland, California. They received a critical PPP loan from CNote partner, Self-Help Federal Credit Union, which allowed them to rehire employees, and continue serving the community.

After the pandemic began, a subset of about 300 CDFIs delivered $7.4 billion in PPP loans within the first three months. For comparison, JPMorgan Chase, which is the largest PPP lender and whose assets total $2 trillion, made only four times as many PPP loans as CDFIs did while being about nine times the size of the CDFI industry. In 2021 when the PPP portal reopened for an additional round of federal relief capital at the beginning of 2021, CDFIs were granted an exclusive access period to fulfill loan applications in recognition of their unique position to reach those being hit the hardest by the health and economic effects of the pandemic.

CDFIs have led the way for decades in supporting recovery efforts and it has been no different during the pandemic, and are essential to the health of our economy as a whole.

Investing in CDFIs as a way to support economic inclusion, economic justice and to reduce the wealth gap

In September of 2019, CNote co-hosted a webinar with leading CDFI, Access to Capital for Entrepreneurs (ACE). You can watch the webinar below or register and watch it on demand anytime here.

The webinar introduces Community Development Financial Institutions (CDFIs) as an impactful and competitive investment. Highlighting their strong history of providing economic resources to financially underserved communities across America, helping to create jobs, fund small businesses, and support affordable housing development.

Large banks and foundations of all sizes have been investing in CDFIs for decades. Until recently, investing in a diverse pool of CDFIs at scale presented significant challenges for all but the savviest of investors. Now, with CNote, investors of all sizes can deploy capital across a diverse pool of CDFIs with ease.  

This presentation provides an overview of the CDFI industry, its history, how CDFIs are certified by the Department of Treasury, their mission and the types of investments CDFIs make in the communities they serve. Most importantly, this webinar explores the way increased capital access and CDFI lending activities can have a transformative effect.

“Even if you never apply for a loan from a CDFI, you should care about them. These institutions serve in places that the financial sector historically hasn’t served well. And that lifts our whole economy up.”

  • Secretary Janet Yellen

How do I invest in CDFIs?

Prior to CNote, investing in a CDFI was a difficult, rigorous, and generally limiting process. CDFI investments can often be bespoke undertakings. 

Today, anyone can invest as little as $1.00 in CDFIs to earn a higher return on their savings and have an impact on communities across the country. CNote optimizes for impact within its portfolio of CDFIs, and is the first company to make CDFIs, as an asset class, available to all investors. 

If you are interested in investing in community development and want a better return on your savings, CNote might be a good option for you.

 

By Small Businesses

Pandia Health – An inspiring story of a female entrepreneur that is improving other women’s lives

The Kind of Company, and Entrepreneur, That Inspires Us

At CNote, we a believe in underdogs. Our mission is to deliver financial empowerment, both to savers, and to financially underserved communities. Your investment in CNote drives community development projects, and provides the funding female and minority entrepreneurs rely on to get their businesses off the ground.

Often, its hard to envision what these companies might look like, who runs them, and how they impact the world. Today, we highlight Pandia Health and its CEO, Sophia Yen, MD, MPH, as an example of the kind of change that can occur when a motivated entrepreneur is given the capital to execute on her dream.

Dr. Sophia Yen has over 20 years of experience in medicine. She serves as a clinical Associate Professor of Pediatrics in the Division of Adolescent Medicine at Stanford Medical School. She graduated from MIT, UCSF Medical School, and UC Berkeley with a MPH in Maternal Child Health. Dr. Yen co-founded Pandia Health and enjoys educating the public and other physicians about birth control, acne, weight management, and other adolescent health issues. 

The Pandia Health Peace-of-Mind, Taking The Pain Out of Reproductive Health

For the vast majority of the women who use it, birth control can be a real pain in the uterus. It’s a pain to swallow a pill every day. It’s a pain to drive to the pharmacy once a month to refill the prescription. But most of all, it’s painful to stress over the possibility of an unplanned pregnancy and the life-altering impact it can have.

Dr. Sophia Yen, co-founder and CEO of Pandia Health, calls it “pill anxiety.”

“You’re going through your pills and you get to that last week; and if you don’t get to the pharmacy, there will be a dire consequence. And so you have that stress in the back of your mind every single month,” she explains, speaking of her own experience as well as that of millions of other women. “And so that is the goal of Pandia Health…to cure women of this pill anxiety.”

“Set it and forget it; don’t run out on our watch.”

Indeed, when it comes to birth control, Pandia Health has taken over the watch. Through its website the company offers two main services: 1) monthly deliveries of birth control to the customer’s door, billed to insurance; and 2) telemedicine prescriptions costing a flat rate of $39, valid for a year. By taking over the responsibility of refilling birth control, Pandia Health has cured pill anxiety with what Dr. Yen dubs “Pandia peace-of-mind.”

Pandia Health’s Mission, and Drive, Comes From its Founder

From the way Dr. Yen speaks of her company, it’s clear that it is a source of pride and joy to her: “We are busting open access, and that’s what makes me happy: saving women stress, preventing unplanned pregnancy.”

An MD and MPH in Maternal Child Health, Dr. Yen has a demonstrated passion for women’s health and reproductive rights. Pandia Health is a natural extension of that focus. Indeed, it was in preparing for a talk about birth control that she conceived the idea of Pandia Health. 

“I came across this statistic that one of the top three reasons women don’t take their birth control is they don’t have it on hand,” she recalls. “And I said, ‘This is easily solvable.'” 

But her passion to solve such problems began even before that.

When Sophia Yen was 15, she ran a pregnancy test. The test wasn’t for her, but for her 13-year-old client in a pregnancy counseling program. And it came back positive.

“That was life altering for that patient forever,” Dr. Yen recounts. “It just made me sad to see the two different trajectories: I was going to head off to college and off to medical school, and she was going to head off to a life of teen pregnancy. And so I realized then how critical it is that people have access to birth control and comprehensive sex ed.”

Since then, she has not stopped “busting open” that access. Nowadays she continues to take joy in her work, motivated by the impact she can have on young lives with her work.

The joy is clear in the way she treasures her customers. Admiring their initiative to prevent unplanned pregnancy and make their lives easier, she calls them all “beautiful” and includes “fun things, randomly” in their shipments, such as chocolates, sunglasses, and condoms. On the rare occasion that there’s a problem with a refill date, she contacts the patient’s pharmacy to make sure patients have access to a new prescription before the pills run out.

In the end, the personal and professional commitment that characterizes Dr. Yen’s work comes from a passion to empower women to control their own destiny. She’s said that her life’s work is to make women’s lives easier by saving all the unnecessary effort that goes into getting and using birth control. Her commitment to reproductive health is consistent, from the bumper sticker on her car, to the playful uterus-shaped pendant that adorns her necklace. 

Turning Challenges Into Opportunities

In the early stages Pandia Health’s founding, the passion was there, but the money was not.

“The financial part is always ugly in the beginning…Funding-wise, you just have to bootstrap it or suck it up until you get money,” says Dr. Yen.

But her efforts to “bootstrap it” and secure funding at investment pitches were met with some resistance: namely, the barrier of many potential investors not understanding the problem because they had never experienced it personally.

In addition to uncertainty in the cause, there was also some uncertainty in Dr. Yen herself as a potentially successful entrepreneur. From the female founders before her Dr. Yen quickly learned to “never bring your male CTO or co-founder next to you, because they [investors] will be looking to him to approve, even though you’re CEO, even though it’s your idea, even though you brought the whole team together.”

Aside from gender bias, there was the perceived disadvantage of her being a physician (who are not traditionally credited with good financial intuition) and being a mother (who are not traditionally credited with having much time on their hands).

But rather than being weaknesses, Dr. Yen argues these unique life experiences helped her succeed. As a physician and mother, she was accustomed to working hard. And as a woman entrepreneur, she was able to anticipate being judged on accomplishments rather than potential. She knew she had to work harder and be more proactive than most if she wanted Pandia Health to succeed. So, she arranged a team of five multi-disciplined founders to make sure that they “could absolutely do it” before they asked for money.

Talk about weaknesses being turned into strengths.

It turned out that the “weaknesses” perceived by some investors became Pandia Health’s saving grace in other circles of investors. Namely, the cause for accessible birth control that turned 70-year-old male investors away, was admired and supported by organizations who liked to invest in social entrepreneurship, like OneWorld and Women’s Startup Lab.

Through such organizations, Dr. Yen was able to not only secure investments, but also access networks where she could exchange resources with other “femtech” companies for the mutual benefit of both. 

Pandia Health’s Impact

Now, three years after her initial idea, Dr. Yen continues to strive for solutions to the women’s health issues she is passionate about. With an adaptable mindset picked up from MIT, and a work ethic refined in medical school, she pivots her business in directions best suited to her customer’s needs: starting an ambassador program to increase awareness on college campuses; raising money to expand services nationwide and establish Pandia Health’s own pharmacy.

Of her company’s growth, she says, “We see a future where we start with birth control, we gain women’s trust, and we grow with them as they grow. So there’s huge potential, and you have to be flexible, you can’t be in a set mindset.”

But although the growth path is open to change, one thing is constant: The company will adapt itself to respond to women’s needs. It has done so from the very beginning and will continue to do so. And that is what women can count on for continued Pandia Health peace-of-mind.

Dr. Yen has shown us the impact a dedicated entrepreneur can have on the world. The money invested in Pandia Health has been a force for good in the lives of the women the company has served. Because Pandia Health predates CNote, we have not deployed any investment dollars in Pandia Health directly, but we will continue to work to drive dollars to entrepreneurs like Dr. Yen and share their inspiring stories, regardless of their funding source.

Pandia Health Today

Pandia Health is looking to expand its services nationwide and continue serving women in the most convenient, pill-anxiety free way possible. Their work is more relevant than ever, now that affordable birth control has become even less of a guarantee given the recent defunding of insurance-covered contraceptives.

To find out more about Pandia Health’s services and impact, visit their website: https://www.pandiahealth.com

For FAQs with Dr. Yen about birth control, women’s health, and more, take a look at their Youtube channel and blog

 

Dr. Yen encourages those interested in women’s health and advocacy to support the Silver Ribbon Campaign. That charity serves as an advocate for the respect of women’s reproductive rights.

Additionally, Pandia Health has created a Birth Control Fund to provide “financial assistance to women in need of access to birth control.” You can read more about that program here.

 

 

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Herein lies the opportunity, and the triumph, of CDFIs. Their mission is to ensure that high-potential, underserved borrowers get the capital they need to run their businesses. They provide fair costs of capital, reasonable short and long-term products and one more thing – business coaching. CDFIs understand that running a business and assuming a loan are large responsibilities that, for most of us, require additional coaching and mentorship.

If you haven’t heard of CDFIs I encourage you to check them out. Everyday I stumble upon new learnings and success stories of how CDFIs are transforming our communities. I look forward to sharing them with you.

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