Community finance CEOs: Small-scale lenders and borrowers can power local economies, especially in difficult times

When it is Needed Most


Like so many of our fellow South Carolinians, our first thoughts during this crisis are with those who have been directly affected by COVID-19 and the healthcare workers who are on the frontlines of the medical response.

As far too many South Carolinians are feeling personally, there is also a dark economic side to this pandemic. It began in March with mass layoffs and small business closures in our hospitality industry and has continued this month with widespread job loss and furlough announcements from several major South Carolina employers like Boeing, BMW, Michelin and MUSC.

We want to be optimistic about a quick and complete recovery, but history tells us — along with several current economic projections — that such a disruption will put our economy into a significant recession in the immediate future. The truth is many of our most vulnerable small businesses and entrepreneurs will be hit the hardest. Federal resources such as the Economic Injury Disaster Loans (EIDL) and the Paycheck Protection Program (PPP) may never reach these small and micro businesses due to larger businesses having greater access to traditional banks or less-trusted banking relationships between smaller businesses and conventional financial institutions.

During such times, organizations like ours, Community Development Finance Institutions (CDFIs), have proven to be vital sources of economic opportunity and community development. We are mission driven non-profit financial organizations whose purpose is providing access to financial capital where it would not otherwise be available. Our average loan sizes are relatively small, less than $100,000, but fund some of the most important wealth-building opportunities and important services in our communities. Restaurants, daycare centers and beauty salons for first-time business owners are among our most common borrowers.

During an economic downturn, our organizations become even more vital to our economy as traditional institutional financing tends to become scarce during recessions. Banks have historically tightened their credit criteria at the precise time low-wealth people need it the most. Where for-profit banks and traditional finance institutions won't lend, we will. Between our three organizations, the largest CDFIs in South Carolina, we have funded hundreds of local small businesses, affordable housing developments, and community facilities.

That work is never more important than during difficult economic times, and we need your help to ensure we remain able to do our work. State and federal policies like Community Development Tax Credits and the Community Reinvestment Act are vital policies that keep us viable. We applaud the intent of the CARES Act, and hope that it is the first of many economic policies that will help us all adapt and respond to our new reality.

We ask you to advocate to your elected officials and remain mindful that we are in uncharted economic territory and we need to develop, protect, and strengthen innovative policies to keep community development finance viable during a time when it is needed most.

Tammie Hoy Hawkins is the CEO of CommunityWorks, Anna Hamilton Lewin is the CEO of South Carolina Community Loan Fund, and Steve Saltzman is the CEO of Charleston LDC.

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