Lending on character, not collateral, to shift capital and power to Black and Native leaders

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In the aftermath of the Covid-19 pandemic, Common Future launched its Capital Strategies (now Impact Investments) body of work. We knew that we wanted to do things differently by incubating, co-creating, and funding investments that centered and empowered community expertise. 

That included a pilot to test character-based lending.

The idea of lending based on a recipient’s character and community ties was not new, but due to the lending industry’s history of inequitable practices  – such as a reliance on credit scores  – there was an imperative for improvement and innovation. We listened to what so many respected Black, Indigenous, and People of Color, or BIPOC, -led entrepreneurship support organizations were thinking about, which led to our first move in character-based lending

The character-based lending model considers the applicant’s relationship with the lender as a safeguard for the likelihood that they will repay the loan instead of credit scores, built to show that we can successfully shift power alongside shifting capital. Two years after our initial launch, we’re thrilled to share that the pilot will be fully deployed by the end of August this year. 

Character-based lending

Through this unique, trust-based partnership model, our local partners with strong community roots, Native Women Lead, ConnectUP! and MORTAR, will have deployed nearly $900,000 of relationship-driven loans to 18 BIPOC small businesses in Arizona, Minneapolis, New Mexico, and Ohio. 

Over the course of the pilot, Common Future acquired Community Credit Lab, which first partnered with us as the facilitating partner for the pilot, providing design support services to local partners, and the infrastructure to deploy and manage funds, allowing us more capacity to expand our impact-first investing work.



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