Prestamos CDFI, a division of NeighborWorks network nonprofit Chicanos Por La Causa, has funded billions of dollars in Paycheck Protection Program (PPP) loans during the pandemic, with more than three fourths of those loans going to minority-owned businesses. By the end of June, the Community Development Financial Institution funded $7.6 billion in loans, supporting hairstylists, artists, custodians and more. Most of the loans have been allocated since January.
Some of those businesses employ five to 20 employees, says Jose Martinez, president of Prestamos. Some are run by just one person, "solopreneurs" who, until recently, had not been eligible for the PPP loans. By the end of June, the Prestamos supported close to half a million businesses.
"From the get-go, our team has been so motivated to reach the underserved, to reach the smallest-of-small businesses," Martinez says. "It worked."
Prestamos – Spanish for "we lend," – partnered with Blueacorn, a fintech company, to increase capacity. The CDFI also added permanent and temporary staff to help businesses across all 50 States including Puerto Rico, Guam and Washington, D.C. Larger banks focused on larger loans.
"We stretched ourselves, as we've done before; as we've done through the whole pandemic," Martinez says. "We keep stretching ourselves."
Prestamos became a Certified CDFI in 2000, but the organization has been granting small loans since the 1980s. The CDFI has been growing, but the pandemic sped things forward even more.
As an industry, CDFIs work to help the people for whom traditional banking is not as accessible, particularly people who are low-income and underserved, including communities of color who have not yet been able to close the wealth gap because of a history of discriminatory practices. CDFIs provide financial products and education. Martinez believes the PPP program elevated the stature of CDFIs.
"We really became a part of the national conversation in a different way, but the role has been the same: It's always been about getting people access to financial products and services they can't get elsewhere."
The conversation about CDFIs continued in June with a NeighborWorks America CDFI Summit, "Opportunity and Resilience: Meeting the Moment." Martinez spoke at the summit. Of NeighborWorks nearly 250 network organizations, 84 of them have CDFIs.
"CDFIs are the vehicle to correct our existing financial systems," says Paula Planthaber, director of lending for NeighborWorks America. "Each organization that is recognized as a certified CDFI is accountable through criteria set by the Department of Treasury CDFI Fund. The 84 CDFIs in our network take risks and mitigate them by meeting each borrower at each step of the underwriting process."
They're making a difference, too, enabling individuals to build assets through small business development and homeownership. Victor Dominguez, who runs ODR Auto Wrecking with his father in Phoenix, Arizona, wasn't sure how they were going to stay afloat when they received a call from Prestamos, talking about the PPP loan. "They broke it down for us," he says. In September, they agreed to apply, and the funding came soon after. 
"The pandemic hit us really hard," Dominguez says. "We usually get 30 to 40 calls a day. During the pandemic, there were some days when the phone wouldn't even ring. Our walk-in traffic went straight down."
They reduced their one employee to three days a week. "We didn't know what was going to happen and when it was going to end. We were just worried." The PPP loan got them through until things began to open up again, which for the auto company was in the fall.
Other NeighborWorks network organizations, too, have been helping with PPP loans. BCL of Texas was able to make a number of PPP loans after requirements changed in May. During that month, the nonprofit dispersed its largest volume of small business loans: $4.8 million to 200 small businesses.
Hope Credit Union, a CDFI in Mississippi, even got called out by name during a press conference with Vice President Kamala Harris in June. Opportunity Finance Network President and CEO Lisa Mensah said the organization had saved 10,000 jobs through PPP loans.
At that press conference, Harris announced that the U.S. Department of Treasury was awarding $1.25 billion in COVID-19 relief funds to 863 CDFIs. NeighborWorks network organizations account for nearly 9% of the nation's CDFIs.
07/06/2021
