NACA Director General Bruce Marx and former currency controller and LISEP chairman Gene Ludwig today announced a groundbreaking lending program for minority-owned businesses.
Economic equity loans will become a model for financial institutions, financial regulators and governments in tackling economic inequality created by the long-term inability to access capital on favorable terms. This program will offer fixed loans with low interest rates to people who do not have wealth and high credit scores and who have been subjected to systematic racism.
Economic equity loans provide some of the best conditions for small business loans available anywhere. Borrowers will receive an extremely low amount 3% fixed interest rate, no fees and closing costs and other favorable conditions adapted to the individual needs of the borrower. Community Borrowing Committees will meet with each borrower (s) to consider applying for a loan without regard to their credit score.
Borrowers will need to demonstrate how their loans will positively impact their communities or eliminate economic and social inequality. Loans are available to borrowers across the country, and funds will be issued to borrowers quickly, without lengthy paperwork, excessive credit and collateral requirements, fees and other barriers required by traditional loan programs. Borrowers can apply for a loan here: https://www.economicjusticeloans.com
“Low- and middle-income Americans and minority groups, in particular, have long struggled with access to capital for anything other than usurious conditions with high interest rates and outrageous fees,” said Ludwig, chairman of the Ludwig Institute for General Economic Welfare. LISEP). ). “LISEP is collaborating with NACA on this innovative loan program to demonstrate that capital for people who are not rich should not direct them further up the economic ladder. Our goal is the opposite. These loans will help people build businesses and improve the environment without burdening them with piles of unbearable debt.
Minority-owned businesses and start-ups have faced many barriers to capital due to a history of discrimination in lending, including structural discrimination that has blocked the ability to create wealth for generations.
“This lending model provides the basis for hundreds of millions of dollars in additional lending,” says Bruce Marx, CEO and founder of NACA, the Neighborhood Assistance Corporation of America. “We learned that if you build it, they will come. America’s best low-income NACA mortgage began with a multi-million dollar commitment and now has more than $ 20 billion. We expect the same result with the extraordinary environment and community-based decision-making process built into the Economic Justice Credits program.
Economic equity loans provide low- and middle-income businesses with a new source of financial assistance. The program aims to overcome barriers to capital by making funds readily available and affordable to start, develop or expand small businesses belonging to minorities, or to improve neighborhoods. There were many of these barriers. The 2021 Small Business Loan Surveypublished by the US Federal Reserve, it was found that in 2019 and 2020, businesses owned by people of color were less likely to receive funding.
Only 13% of black-owned firms that applied for funding were approved against 40% of white-owned firms. Even among firms with good credit scores, firms owned by blacks still received half as little funding as firms owned by whites. This reality is the result of centuries of blatant discrimination, including the atrocities of the Red Line in the 20th century, which damaged the ability of blacks to create wealth. And for those who had no other financing options other than payday loans, in 2020, borrowers were threatened with almost 400% interest rate on a two-week loan, according to the Bureau of Consumer Protection.
Founded in 1988, NACA is the largest nonprofit organization approved by HUD, a community organization in the 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 more than 250,000 homeowners. NACA provides the best mortgage in the country through its 48 offices across the country.
NACA founder and CEO Bruce Marx was named Boston of the Year for 2007 due to his work on attracting major lenders and servicers to change home loans. He also repeatedly testified before Congress, including on September 12, 2000, being one of the few who killed the alarm over the impending mortgage crisis.
For more information, visit www.naca.com.