"People First". The Real Impact of Community Lending with CCEDC

In this interview, we had the chance to speak to Chris McHenry from CCEDC. Below is a piece of the interview highlighting CCEDC’s people-first approach to lending and how they strive to drive more impact in their community.

Peter Truog: You recall the story from last week about the individual who managed the sneaker store? There were two parts of that story that jumped out to us. First, how you’ve updated your credit policy as an organization to lend to borrowers who can’t get credit from more traditional lenders. Second, it seems like you’ve been able to reach lots of potential applicants in your community. Could you tell us more about how you’re approaching credit policy and applicant outreach?

Chris McHenry: Absolutely, our credit policy, which was carefully developed and approved by our board of directors, is the foundation of this program. It's deliberately designed to be less stringent compared to traditional banks, who face regulatory scrutiny from groups like the Federal Reserve and FDIC. Our assessment primarily focuses on the borrower's character, and allows us to avoid screening applicants out who would not have a chance with other lenders due to credit history, a past criminal record, or other factors. To us, it's more than just analyzing a credit score; it's about genuinely understanding the person. A low credit score could be due to past instances from years ago, like unemployment, which might not be reflective of their current situation. We care about an in-depth evaluation beyond just metrics.

Peter Truog: Your approach is indeed refreshing and necessary. I've witnessed your commitment during our collaboration on setting up the portal. Are there more examples you can share that illustrate your approach, perhaps related to how you conduct outreach to borrowers?

Chris McHenry: We haven't heavily marketed the fund. Instead, we initiated a single announcement and engaged with influential figures who are respected within the community. Our proactive involvement in these areas over the past few years has been instrumental. In fact, we established a business resource center right within one of the most underserved communities, starting with a small office and now transitioning to a larger space to meet the growing demand.

One of my colleagues, Darlene, took a proactive stance by reaching out to the town of Oxford, which has a substantial Latino and Hispanic population. The challenge was in building trust. Rather than simply offering loans, we immersed ourselves in helping these businesses qualify for grants, prepare financial statements, and transition to organized records. It's a commitment to working together that distinguishes our approach. The pandemic amplified our use of technology like Zoom, allowing us to guide businesses through financial documentation, bridging the gap between the box of receipts and structured statements. Our approach has helped regain the community's trust that had been eroded due to past disappointments.

Peter Truog: That's remarkable. The story you shared about the sneaker store owner, is this person one of the beneficiaries of the Catalyst program?

Chris McHenry: Indeed, the individual received funding from our Catalyst program, which is funded through the federal Small Business Credit Initiative (SSBCI) money, facilitated by the state of Pennsylvania. This particular program necessitates a one-dollar private match for every dollar in Catalyst funds. A bank wouldn't have supported this due to the low credit score and limited collateral from sneakers. This underscores the unique support we provide. In cases where we struggle to find the required matching funds, we have dipped into our reserves to fill that gap.Being a private organization has allowed us to allocate funds from our own reserves to meet the match requirements for private money. The executive leadership, the board, the DNI committee, and the micro-lending committee all unanimously support this approach. It's quite a transformation from the conservative stance of holding onto funds for potential emergencies. The shift towards prioritizing community impact is evident.


Look out for another piece of the conversation with CCEDC about their Catalyst Fund coming soon!

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