Community Loan Fund
Create a replicable model to fund disaster relief and low income housing
Get beyond government funding and bring in private capital, which is unlimited
Create a model for private financing and entrepreneurship
There's a lot of opportunity for work to be done, but there's no vehicle
If a business owner the customers don't have assets or stability
Short term opportunity to kick things off and spark entrepreneurship and economic activity
The money spent after Katrina was not spent on businesses
Three priorities for government: PR value, throwing money at cronies, nothing else matters (they don;t care about externalities)
If there were vehicles in place channeling funds into local economy after a disaster, then you can spark local economic engine
Community Loan Fund could absorb some of the higher risk loan applications
There are pools of money available other than FEMA which could be accessed
Does Vancity have a plan and strategy in place for a major disaster
If we don't have a local plan to rebuild, then that economic activity funds growth in another area
Money goes to crony businesses far from the local need instead of pumping that money into local businesses that has a dual role of rebuilding and growing local economies
notes from BL:
Notes from “Community Loan Fund exploration”
BarCampBankSeattle 070722
Some questions:
● Relation of Community Loan Fund to Banks & Credit Unions?
Opportunity for synergy?
● Direct lender to projects? Further interlocutor or community agency needed?
● What infrastructure needed at Community Level
population size for critical mass?
● Results / metrics. What needs to be published to communicate process and lessons?
● Replicable model: minimum set of attributes for successful CLF
Re Disaster Relief:
The Katrina experience indicates the importance of getting a CLF in place in advance of the disaster. Rebuilding in the Gulf Coast was and is very slow largely due to the lack of a channel for funneling funds for reconstruction.
Low Income Housing:
Bank and other sources of capital expect the CLF to:
● identify borrowers
● keep borrowers making their payments; minimize foreclosures
● Serve in two roles:
as a coordinator between the bank/funder and borrower (bank as lender to )
as the financial entity between the bank/funder and the borrower (CLF as lender)
● at VanCity, the “SpringBoard Mortgage” is an analogous model.
Disaster Relief:
If the financial channel isn't in place to funnel capital to local businesses, the disaster relief funds will go to cronies and established businesses outside of the affected region.
Disasters are an opportunity for private capital. Much demand for capital. How can a CLF serve to channel private capital away from predatory lending and into more of a social lending role?
There is much control in the US at the level of the County to mandate how resources will be provided.
Economic Development:
Short-term after disaster – Prime the pump; spark the economic engine
CLF can learn from and rely on local banks and their existing relationships with local businesses
Can the CLF absorb higher risk loan applications? Under-collateralized?
CLF can provide services for banks doing social lending
At VanCity: “Peer Lending” program
● 6 people needing $1,000 each: a cohort
● shared accountability and group process
● “boost over a hurdle”
Also CD pools for social lending: direct loans by VanCity
● “Shared Growth Term Deposit”
● Shared World Term Deposit
micro-loans to 3rd World
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