Moving Toward a Solidarity Economy: Lending on Character

"Conventional banking hasn't worked for businesses owned by people of color. But a new network is designed to get money flowing fairly to BIPOC economies." Common Future’s CEO, Rodney Foxworth, speaks with Yes! Magazine about their strategy to disrupt traditional lending models, which are neither racially neutral nor adequate for BIPOC communities or businesses.

Character-based lending is "the practice of issuing loans based primarily on the borrower’s character—their involvement in and ties to the community, or their reputation and track record therein—relegating financial criteria to a smaller role in decision-making," reports Chris Winters. Common Future is working with several community partners for the launch of this approach including ConnectUp! Institute in St. Paul, Minnesota, a networking and business development group. that builds on personal relationships with community. Elaine Rasmussen, the organization’s founder, reflects, "In the U.S., that kind of relationship historically was restricted to White business owners. But’s not anything new, particularly when you look at African countries and you look at the concept of sou-sou—shared funds."

"The plan is to grow the program with capital obtained from repaid loans and from more philanthropic sources, to include other partner organizations who are best positioned to serve their communities," says Foxworth. "The whole purpose of character-based lending is in fact to strengthen the power and capacities of the folks in our network to maintain and build on these things themselves."

Read the full discussion here.