Micro Lending

While character-based, community-circle micro-lending is not new to the field of financing, especially internationally, the foresight to offer these loans through partner organizations versus a banking institution is largely untried in the United States. The micro-lending program flips the traditional model of a borrower applying for a loan through a financial institution. Instead, a partner organization (i.e. the Downtown Growers’ Market), such as a nonprofit, community organization or educational institution, applies for this funding and, in turn, sponsors a loan on behalf of one of their member affiliates.

This micro-loan program does not rely on the traditional “5 Cs of Credit” (character, capacity, capital, collateral, conditions), but on trusted relationships between partner organizations who receive this funding and potential borrowers in the communities they serve.

This program has been called the “alternative to the alternatives” as it does not require credit, collateral, or status; and shifts the decision-making authority to community organizations, nonprofits, and institutions based on character, goals, and determination so entrepreneurs can build businesses that succeed. It also fills a gap – allowing access to capital to those who may not qualify under other lenders’ criteria; it also offers another avenue besides predatory lenders.

The DGM as a partner of this program, sponsors a low-interest loan through its Nusenda Credit Union deposit account; Nusenda in turn provides the origination, servicing, and credit reporting.

Partner organizations decide whether to make the loan based on their own criteria and relationship with a prospective borrower. Credit reports from potential borrowers are not required; instead, the relationship between the partner organization and the borrower drives the loan approval process.