Community development financial institutions (CDFIs) like Oakland’s Pacific Community Ventures (PCV) exist to align capital with justice initiatives and to work for communities of color against hundreds of years of systemic racism. The racial justice uprisings last year reinforced how these communities have been historically excluded from banks, government wealth building programs, and redlined out of homeownership, CDFIs have become increasingly popular investment vehicles to advance racial and economic justice. Investing in CDFIs isn’t enough, though, if it just means extracting capital from communities of color through high interest rates and fees. Small businesses need capital that works for them. True economic and racial justice isn’t done through replicating what the traditional financial system does on a smaller scale and with a friendlier face.
There’s a better way. For its part, PCV recently launched the Oakland Restorative Loan Fund — no fee, 0% small business loans from $10,000 to $100,000. This new fund prioritizes what entrepreneurs of color need to stay in business, grow sustainably, and counter displacement and gentrification in their communities. While almost 20% of California small businesses owned by people of color permanently closed in 2020, this year people of color have put in the highest number of new business applications. Today’s American entrepreneurs are in communities of color – and CDFIs, such as PCV, are showing up to help them succeed.
During this initial launch of the Oakland Restorative Loan Fund program, PCV expects the first $2.5M to reach BIPOC + AAPI-owned businesses based in the Fruitvale area, West & East Oakland, North Oakland in the Temescal Business Improvement District, and Oakland’s Chinatown.
The Oakland Restorative Loan Fund serves as a model for community building and restorative capital that all investors, foundations, and city governments should be seeking to build.
PCV is lending where it counts. Yet, more needs to be done by the financial sector to provide support to clients in crisis, especially historically underinvested people and places, communities of color, and Native communities. CDFIs like PCV need investors to better align with its intentionality on racial and economic equity, not just prioritizing for financial returns.