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On World AIDS Day, New Mexico activists say more money is needed for prevention; ND farmers still navigate corporate land-ownership policy maze; Unpaid caregivers in ME receive limited financial grants.

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Secretary of State Antony Blinken urges Israel to protect civilians amid Gaza truce talks, New York Rep. George Santos defends himself as his expected expulsion looms and CDC director warns about respiratory illness as flu season begins.

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Congress has iced the Farm Bill, but farmer advocates argue some portions are urgent, the Hoosier State is reaping big rewards from wind and solar, and opponents react to a road through Alaska's Brooks Range, long a dream destination for hunters and anglers.

New System to Resell Small Business Loans Helps Women, People of Color

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Tuesday, July 18, 2023   

A new system of bundling and reselling small-business loans is funneling millions to companies owned by women, people of color, immigrants and others who are often excluded from the financial system. Community development financial institutions - known as CDFIs - focus on small loans of $5 to $250,000 sometimes even if the business has not started turning a profit.

Brett Simmons, managing director at Scale Link, said the nonprofit buys loans from CDFIs and bundles them for larger banks looking to meet requirements under the Community Reinvestment Act.

"Any CDFI, after they originate a loan, they have to wait for repayment before they have new capital to lend. And we help them get that capital back faster by purchasing loans from them," said Simmons. "So, that frees up new cash to lend. And then we also help them generate new revenue by packaging some of those loans together and selling them to banks."

This secondary market is expanding. Since Scale Link launched in 2020, it has purchased 731 loans made by CDFIs to California small businesses, worth more than $14 million.

Sara Razavi, CEO of Working Solutions CDFI, said her group focuses on helping businesses that have a hard time getting financing from traditional banks that prefer to deal with larger, more established companies.

"They're just low-income individuals who have limited credit profiles and have been designated by banks as being less likely to pay back, but we have an over 95% repayment rate," she explained. "So, the quality of our portfolio is extremely strong."

Nationally, Scale Link has purchased more than 2,800 loans worth $43 million and has donated $4.4 million in profits back to the CDFIs.

Disclosure: EMC Communications contributes to our fund for reporting on Environment, Philanthropy, Social Justice. If you would like to help support news in the public interest, click here.


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