The expanded child tax credit, signed into law by President Biden in March, is an unexpected windfall to many families. For banks, it represents both a short-run test and a longer-term opportunity. The test is that many unbanked households are having trouble accessing their funds in a timely manner, and the Biden administration is asking banks to be part of the solution. On the flip side, parents who do have bank accounts are likely to want advice on what to do with the sudden influx of cash, offering banks a unique customer engagement opportunity. "I think that there's a substantial opportunity for banks and for others to communicate with consumers about this basically free money in their accounts," said Peter Tufano, a finance professor at the University of Oxford's Said Business School who has been surveying U.S. families about the child tax credit.
Virginia Community Capital Bank in Richmond prizes the clean energy lending program it launched five years ago. But as a small community development financial institution, it lacked the resources to find socially minded depositors at the scale it wanted to fund its solar loans. Ando, a challenger bank that focuses on sustainability, is finding them instead. The San Diego fintech has the trappings of a typical neobank: no monthly fees, early direct deposit and interest rates that grow in exchange for referrals. But its mission is to fund clean energy, sustainable agriculture and other green loans made by partner banks, of which the $233 million-asset Virginia Community Capital (which markets itself as VCC) is the first. “It’s always been my dream at VCC to match impact-minded deposit customers directly to the solar loans that we do,” said Bill Greenleaf, the bank's real estate lending team manager and clean energy loan officer. “We just don’t have the technology infrastructure or the marketing resources to find individual depositors that want to focus on clean energy.”
Quontic Bank, a community development financial institution in New York, has made a name for itself as an innovator. It was the first U.S. bank to have a bitcoin rewards card; it pays 1.5% back in bitcoin rewards for every debit card transaction. The bank has other products in the works, including a ring that can make debit card purchases. The $1.4 billion-asset Quontic also has been expanding its mortgage business. It is using a new method of underwriting that allows people in good credit standing but with low incomes to afford a home; 70% of its home loans are made to such customers. In a recent interview, founder and CEO Steven Schnall gave an update on the bank's bitcoin-related activities, its process for turning new ideas into action and its progress in the mortgage business.
As the COVID-19 pandemic began to rattle businesses nationwide and the federal government launched its Paycheck Protection Program, businesses in Maryland and beyond struggled to process their applications. The PPP program was launched in April 2020, but some businesses said their applications were delayed — in part because they could not find banks that accepted applications, and many banks weren't set up to do so. John Lewis, president and chief operating officer of the Harbor Bank of Maryland, said his bank not only accepted PPP applications, but his employees went out of their way to help qualified business owners, regardless of whether they were Harbor Bank customers. Harbor Bank — co-founded by Baltimore native Joseph Haskins Jr. 39 years ago — is the only Black-owned and -managed commercial bank in Maryland. Haskins is the chairman and CEO of the company, which was founded to provide capital to individuals who historically lacked it, Lewis said. Headquartered in downtown Baltimore, Harbor Bank now has six locations, mostly in the city.
No one can reasonably deny that when the overall economy gets a cold, low- and moderate-income individuals and neighborhoods get the flu, largely through no imprudence of their own. History proves that lower-income families, particularly those comprising people of color, get fired first and rehired last. As a result, no matter how hard they work to save, they're almost always left a step behind. The Great Recession was a clear example: While a range of big banking institutions were given taxpayer bailouts, more modest communities were left with a Sisyphean boulder. As we emerge from the pandemic, the cycle is apt to repeat itself. One tool we should use to address this perennial problem has emerged from the world of finance. Despite decades of often fruitful work inducing ordinary banks to serve lower-income communities, many poorer neighborhoods today remain inundated with check-cashing storefronts and pawnbrokers. Many lower-income borrowers have little choice but to deal with loan sharks who make it unreasonably expensive to build real credit and to climb the economic ladder. Fortunately, beyond encouraging banks to serve these lower-income communities, a third alternative has emerged. Appearing to consumers much like an ordinary bank, but operating against a different set of incentives, community development financial institutions, or CDFIs, such as Industrial Bank in Washington, D.C., and Southern Bancorp in Arkansas, are proving to be an indispensable tool in the fight against endemic poverty. But they have yet to be scaled. We need to take several steps to drive CDFI growth and success around the country.
Every year, B Lab recognizes the top-performing B Corps creating the greatest impact through their businesses. These B Corps are named Best for the World as their verified scores in the five impact areas evaluated on the B Impact Assessment (BIA)—community, customers, environment, governance, and workers—are amongst the global top 5% in their corresponding size group. These businesses are proving that competing not only to be the best in the world, but the best for the world, is a winning strategy, and they can lead the way as more businesses continue to join the movement that is transforming the global economy to benefit all people, communities, and the planet. This year, Beneficial State Bank, City First Bank, Spring Bank, Sunrise Banks, and Virginia Community Capital were among the banks named Best for the World.
Southern Bancorp Community Partners (SBCP) seeks a President who brings dynamic and visionary leadership to a nationally respected, high impact community development financial institution delivering loans, development services focused on credit and savings and policy advocacy to expand economic opportunity. Southern Bancorp Community Partners (SBCP) is a certified nonprofit Community Development Financial Institution (CDFI) established in 1987 to create economic opportunity in financially underserved communities.
The U.S. Small Business Administration (SBA) is launching a streamlined application portal to allow borrowers with Paycheck Protection Program (PPP) loans $150,000 or less through participating lenders to apply for forgiveness directly through the SBA. This new change will help rush relief to over 6.5 million smallest of small businesses which has been the Administrator’s priority since day one. The new forgiveness platform will begin accepting applications from borrowers on August 4th, 2021. Lenders are required to opt-in to this program through https://directforgiveness.sba.gov. In addition to the technology platform, the SBA is standing up a PPP customer service team to answer questions and directly assist borrowers with their forgiveness applications. Borrowers that need assistance or have questions should call (877) 552-2692, Monday – Friday, 8 a.m. - 8 p.m. EST.
Join the San Francisco Fed on August 25 for a virtual event titled "Fintech, Racial Equity, and an Inclusive Financial System" to launch a new issue of Community Development Innovation Review. The event will explore the promises and pitfalls of fintech as a means of expanding financial inclusion and reaching underserved communities of color. Innovations in financial technology, or fintech, are changing the ways people interact with the financial system. With these changes comes the possibility of improving inclusion for those who currently lack access to the traditional financial system, including low-income communities and communities of color. But with new ways of doing business come new risks of perpetuating existing inequities or creating new ones. The program features Mary C. Daly, president and CEO of the Federal Reserve Bank of San Francisco, in conversation with Ida Rademacher, executive director of the Aspen Institute Financial Security Program. Experts from across the community development and fintech spaces will discuss the risks and opportunities of financial technology innovation.