02 Mar, 2022, 14:42 ET
WASHINGTON, March 2, 2022 /PRNewswire/ -- Former U.S. Comptroller of the Currency and current LISEP Chair Gene Ludwig and NACA CEO Bruce Marks today announced a groundbreaking lending program for minority-owned businesses. Economic Justice Loans will be a model for financial institutions, financial regulators, and the government to address economic inequality created by a long-term inability to access capital with favorable terms. This program will offer fixed, low-interest loans to people lacking wealth and high credit scores, and who have been subject to systematic racism.
Economic Justice Loans will provide some of the best terms for small business loans available anywhere. Borrowers will receive the extraordinarily low 3% fixed interest rate, no fees or closing costs and other favorable terms tailored to fit the individual borrower's needs. Peer lending committees from within the community will meet with each borrower to review the loan application feasibility without consideration of their credit score. Borrowers will need to demonstrate how their loans will positively affect their communities or address economic and social inequality. The loans are available to borrowers nationwide and funds will be given to borrowers quickly, without the lengthy paperwork, prohibitive credit and collateral requirements, fees and other roadblocks 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 at anything short of usurious terms with burdensome interest rates and outrageous fees," said Ludwig, Chair 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 aren't wealthy doesn't have to send them further down the economic ladder. Our goal is the opposite. These loans will help people build businesses and improve neighborhoods without saddling them with piles of unaffordable debt."
Minority-owned businesses and startup 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 provides the foundation for hundreds of millions of dollars in additional lending," said Bruce Marks, CEO and founder of NACA, the Neighborhood Assistance Corporation of America. "We have learned that if you build it they will come. NACA's Best in America Mortgage, targeting underserved communities, started with a few million dollars in commitment and now has over $20 billion. We expect the same outcome with extraordinary terms and community-based decision process built into the Economic Justice Loans program."
Economic Justice Loans provide businesses in low- and moderate-income communities a new source of financial relief. The program seeks to overcome barriers to capital by making funds quickly available and affordable to start, grow, or expand small, minority-owned businesses or to make improvements to neighborhoods. These barriers have been plentiful. The 2021 Small Business Credit survey, published by the U.S. Federal Reserve, uncovered that in 2019 and 2020 businesses owned by people of color were less likely to be approved for financing. Just 13% of Black-owned firms that applied for financing were approved, versus 40% of White-owned firms. Even among firms with good credit scores, Black-owned firms were still half as likely to receive financing as White-owned firms. This reality emerges from centuries of blatant discrimination, including the atrocity of redlining in the 20th century, that has hurt the Black community's ability to build wealth. And for those who have had no other financing options except payday loans, in 2020 borrowers faced a nearly 400% interest rate for a two-week loan, according to the Consumer Financial Protection Bureau.
LISEP was created in 2019 by Gene Ludwig and his wife, Dr. Carol Ludwig. The mission of LISEP is to improve the economic well-being of middle- and lower-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 U.S. Comptroller of the Currency from 1993 to 1998. He is also author of the book The Vanishing American Dream, which investigates the economic challenges facing low- and middle-income Americans. It was released in September 2020 by Disruption Books. On Twitter: @geneludwig.
NACA (NEIGHBORHOOD ASSISTANCE CORPORATION OF AMERICA)
Started in 1988, NACA is the largest HUD-approved nonprofit, community advocacy and homeownership organization in the United States. NACA has been at the forefront in fighting predatory lending and has been the most effective organization in providing affordable solutions to over 250,000 homeowners. NACA provides the best mortgage in the country through its 48 offices nationwide. NACA's founder and CEO Bruce Marks was named Bostonian of the Year for 2007 because of his work in getting the major lenders and servicers to modify home loans. He has also testified before Congress on numerous occasions, including Sept. 12, 2000, being one of the few to sound the alarm of the pending mortgage crisis. For more information, please visit www.naca.com.
SOURCE Ludwig Institute for Shared Economic Prosperity
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