New Economic Justice Loans Set New Standard for Lending to Minority Businesses
WASHINGTON, March 2, 2022 /PRNewswire/ — Former US Comptroller of the Currency and Current President of LISEP Gene Ludwig and CEO of NACA Bruce Marks today announced a groundbreaking loan program for minority-owned businesses. Economic Justice Loans will be a model for financial institutions, financial regulators and government to address the economic inequalities created by a long-term inability to access capital on favorable terms. This program will provide fixed, low-interest loans to people who lack wealth and have high credit scores, and who have been subjected to systematic racism.
Economic Justice Loans will offer some of the best terms for small business loans available anywhere. Borrowers will receive the extraordinarily low amount 3% fixed interest rate, no fees or closing costs and other favorable terms tailored to the needs of each borrower. Peer-to-peer lending committees within the community will meet with each borrower to review the feasibility of applying for a loan regardless of their credit score. Borrowers will need to demonstrate how their loans will positively affect their communities or address economic and social inequalities. Loans are available to borrowers nationwide and funds will be provided to borrowers quickly without the lengthy paperwork, prohibitive credit and collateral requirements, fees and other hurdles that traditional loan programs require. Borrowers can apply for the loans here: www.economicjusticeloans.com.
“Low- and middle-income Americans, and minority groups in particular, have long struggled to access capital on anything other than usurious terms with high interest rates and exorbitant fees,” said Ludwig, Chairman of the Ludwig Institute for Shared Economic Prosperity (LISEP). “LISEP is partnering with NACA on this innovative loan program to demonstrate that capital for people who are not wealthy does not have to send them further down the economic ladder. Our goal is the opposite. These loans will help people to build businesses and improve neighborhoods without burdening them with unaffordable debt.”
Minority-owned businesses and start-up entrepreneurs have faced multiple barriers to capital due to a history of discrimination in lending, including structural discrimination that has blocked the ability to build generational wealth.
“This lending model forms the basis for hundreds of millions of dollars in additional lending,” said Bruce Marks, CEO and Founder of NACA, the Neighborhood Assistance Corporation of America. “We learned that if you build it, they will come. NACA’s Best in America Mortgage, targeting underserved communities, started with a few million dollar commitment and now has more than $20 billion. We expect the same result with extraordinary terms and community decision-making built into the Economic Justice Lending Program.”
Economic Justice Loans offer businesses in low- and moderate-income communities a new source of financial assistance. The program aims to overcome barriers to capital by making funds quickly available and affordable to start, grow or grow minority-owned small businesses or to make neighborhood improvements. These obstacles were numerous. the 2021 Small Business Credit Survey, released by the US Federal Reserve, found that in 2019 and 2020, businesses owned by people of color were less likely to be approved for funding. Only 13% of black-owned businesses that applied for funding were approved, compared to 40% of white-owned businesses. Even among businesses with good credit ratings, black-owned businesses were still half as likely to receive financing as white-owned businesses. This reality emerges from centuries of blatant discrimination, including the atrocity of redlining in the 20th century, which damaged the ability of the black community to create wealth. And for those with no financing options other than payday loans, in 2020 borrowers faced an interest rate of nearly 400% for a two-week loan, according to Consumer Financial Protection. Office.
LISEP was created in 2019 by Gene Ludwig and his wife, Dr. Carole Ludwig. LISEP’s mission is to improve the economic well-being of middle- and low-income Americans through research and education, and seeks to advance the dialogue around policy solutions to improve the well-being of all Americans. Ludwig, who founded the Promontory family of companies, served as Comptroller of the United States Currency from 1993 to 1998. He is also the author of the book The fading American dream, which studies the economic challenges faced by low- and middle-income Americans. He left in September 2020 by Disruption Books. On Twitter: @geneludwig.
NACA (NEIGHBORHOOD ASSISTANCE SOCIETY OF AMERICA)
Founded in 1988, NACA is the largest HUD-approved nonprofit, community advocacy, and homeownership organization in United States. NACA has been at the forefront of the fight against predatory lending and has been the most effective organization in providing affordable solutions to over 250,000 homeowners. NACA offers the best mortgage in the country through its 48 offices nationwide. Founder and CEO of NACA Bruce Marks had been named Bostonian of the Year for 2007 due to his work getting major lenders and managers to modify home loans. He has also testified before Congress on numerous occasions, including September 12, 2000, being one of the few to sound the alarm about the impending mortgage crisis. For more information, please visit www.naca.com.
SOURCE Ludwig Institute for Shared Economic Prosperity