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Investing in Beloved Community: A Playbook for Place-Based Impactful Lending

By: Bulbul Gupta, President & CEO-Pacific Community Ventures; Casey Bell, Chief Impact Officer-Pacific Community Venters; Charles Fisher-Post, Associate Director, Good Jobs Innovation Lab-Pacific Community Ventures

Addressing a Legacy of Disparity by Design

Racial disparities in wealth and income, also known as the “Black/white wealth gap,” are no coincidence. They exist by design. 

The damage caused by the racist practice of redlining is not a relic of the past, but persists in perpetrating harm across the country today. Prior to the COVID-19 pandemic, Black & Brown business owners in communities across Oakland had come to expect “a 99% rejection rate” when seeking loans from traditional banking institutions, as shared by Black Cultural Zone Founder and CEO, Carolyn Johnson. The COVID-19 pandemic further exposed these inequities.

In 2020, Black-owned businesses were 30 percentage points less likely than businesses owned by individuals of another race to receive Paycheck Protection Program (PPP) loans from small and regional banks. Beyond these disparities in loan approvals by race, emerging research also suggests disparities in average loan size, with Black-owned businesses initially receiving loans up to 50% smaller than observationally similar white-owned businesses through the PPP. 1

Harm such as this, whether intentional or unintentional, requires intentional, restorative solutions. Which is why in November 2021, as COVID-19 recovery programs like the PPP and small business grants were ending and the Omicron variant added another unexpected layer of economic instability, Pacific Community Ventures collaborated with our partners to try and address these persistent, structural, and sociological barriers to capital access. And along the way, advance our commitment to repair market failures that perpetuate systemic inequities in our home community of Oakland, California. 

Recognizing the power of this place-based model – and through the support of the Catalytic Capital Consortium Grantmaking program –, PCV is proud to launch our Oakland Restorative Loan Fund Playbook in the hopes that replication and scaled models evolve and emerge to repair harm in more historically excluded communities across the U.S. 

Download Playbook

Powered by catalytic capital investments determined to prioritize impact, the Oakland Restorative Loan Fund successfully sustained Black, Brown, Indigenous, and women-owned businesses through the COVID-19 pandemic crisis by beginning to address the legacy of these market failures.

A Community-Centered, Restorative Approach

Impact-first, place-based, restorative investment was even more critical amidst the economic rollercoaster of early COVID in stabilizing the businesses of Oakland entrepreneurs who had already been underserved by traditional banks. In response to the overlapping economic and health crises that intensified between 2020-2021, Pacific Community Ventures launched the Oakland Restorative Loan Fund to support small business owners with catalytic 0%, no fee loans. To ensure the capital was truly rooted in the principles of decolonized capital, democratized access to resources, and restored communities, PCV worked with trusted BIPOC-led community-based organizations to center the self-determined needs of Oakland communities. This listening and feedback process became the human-centered design framework for innovating the loan products, as well as the outreach and service strategies employed to reach the business owners. As part of this process, PCV staff was committed to building organizational trust in PCV among entrepreneurs who had not worked with PCV before or had been turned down by PCV in the past – building on our intention to decolonize PCV underwriting over the previous two years. 

An essential collaborator in this process was Carolyn Johnson (CJ) who represents the East Oakland Black Cultural Zone Collaborative Partners, a collaborative helping to keep Black folks in East Oakland by building power, securing land, and directing more dollars to community driven projects.

“The Oakland Restorative Loan Fund emerged as a small but essential lifeline of hope for some of our small business entrepreneurs across the city at a time when there was almost no other affordable capital within reach. But it was not just the fund; it was a vision grounded in trust, forged through meaningful collaboration, and engagement with a group of leaders committed to helping our community stay in place and thrive again, that made this work so impactful.“ – Carolyn Johnson, CEO, Black Cultural Zone

Alongside the Black Cultural Zone, PCV engaged in deep listening and collaboration with The Unity Council, Feed the Hunger Fund, ESO Ventures, the Oakland Chinatown and Oakland Vietnamese Chambers of Commerce, and the Temescal Business Improvement District. As PCV engaged in building trust and open communication with community partners, they provided referrals to businesses in need of capital. This allowed PCV to not only add value for the borrowers, but also for the community partners directly. 

Through the $2.5M Oakland Fund, PCV was able to support 37 local small business owners — 100% of whom identify as Black, Indigenous, or Persons of Color (BIPOC) — with loans averaging $68,000.

This includes business owners like Rita Forte, founder and owner of The Olive Street Agency, a marketing and screen printing business she has operated since 2012 that honors the East Oakland street she and her mother grew up on. Olive Street Agency consistently partners with organizations, artists and small businesses across Oakland working for social and economic justice. During a listening session with PCV and peer Oakland Fund borrowers, Rita shared:

“Literally before I got this loan, I was thinking of shutting down my business and throwing in the towel. Every entrepreneur goes through times of quitting like that, but I was serious at this time. I sent out an email to my clients and let them know that ‘I don’t see a path forward.’ It was heartbreaking. I’m getting choked up again just retelling the journey. Because the feeling is crazy… [the loan] just meant so much at that time.”

A Playbook for Place-Based Restorative Loan Funds

Designing and implementing the Oakland Restorative Loan Fund was rooted in a three pillar framework. As a first of its kind fund, our intention with this playbook is to support replication of core elements of the Fund in more places and communities.

  • Pillar 1: Capital Structuring – To make the capital as accessible as possible, PCV worked with funders and impact investors to secure affordable loans and unrestricted grants. Blending these two sources of catalytic capital enabled the deployment of 0% and no fee loans to Oakland borrowers. In addition to capital, PCV provided free business advising, and our Good Jobs support, all with the option for translation services, to create a holistically restorative model. 
  • Pillar 2: Community Engagement – PCV co-created and implemented the Fund outreach plan with locally led community partner organizations deeply connected to the underestimated entrepreneurs and underinvested in Oakland neighborhoods that were the intended clients of the catalytic loans. Together, we identified key practices, and barriers – such as language translations, for reaching underserved small business owners particularly from BIPOC communities that have historically been excluded from, and continue to disproportionately lack, access to capital.
  • Pillar 3: Impact Optimization – PCV leveraged data analytics and mapping to maximize the impact of Oakland Fund loans by verifying that capital was allocated to businesses located in historically redlined neighborhoods. Informed by street-level insights from community partners, we worked to intentionally ‘greenline’ them into the Fund’s coverage areas, and identified key considerations for the use of data in the design of place-based catalytic investment funds.

This holistic approach empowered Oakland Fund loans to generate impact for business owners concentrated in neighborhoods that were subjected to underinvestment after being redlined: West Oakland, Temescal, Chinatown, Fruitvale, and East Oakland. Of Oakland Fund loan recipient businesses, 96% were located in historically redlined neighborhoods, assigned a “C” or “D” grade by the Home Owners’ Loan Corporation (HOLC).

This place-based, high-impact approach is now outlined in PCV’s Oakland Fund Playbook. Through sharing the best practices and resources identified in the playbook, as well as our own story of creating the 0% Oakland Fund, we hope to inspire more community investors to pursue community-centered and community-created approaches in providing restorative loans to small business owners as a tool to help communities stay in place and thrive again.

Download Playbook

To learn more about the Oakland Fund, watch our webinar recordings.
Find videos from webinars we led on each of the 3 pillars here.

Thank you Oakland Fund investors whose investments capitalized the Fund – UCSF and Starbucks — as well as grant funders that allowed PCV to provide no fee loans at 0%: GoFundMe, the Citi Foundation, Bank of America, and Battery Powered.

Special thanks to the community leaders who shared their time and lessons learned with us:

We honor these Oakland entrepreneurs for generously sharing their time and stories with us:

We thank our learning community of practitioners for their review and contributions to the playbook:

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  1. Howell, S.T., Kuchler, T., Snitkof, D., Stroebel, J., & Wong., J. (2022, October). Lender Automation and Racial Disparities in Credit Access. National Bureau of Economic Research. (Working Paper No. 29364). https://doi.org/10.3386/w29364 ↩︎