Wells Fargo Foundation Awards $500,000 to TMC Community Capital for Equitable Lending
Nonprofit Lender to Launch Racially Just Underwriting Pilot Program
OCTOBER 31, 2022, OAKLAND, CA -- Nestled between 17th and 19th streets, TMC Community Capital (TMC CC) sits on the third floor of their Broadway Avenue building in Downtown Oakland. A small but rapidly growing Community Development Financial Institution (CDFI), TMC CC is making a splash with its innovative new strategies for equitable lending. With $500,000 in grant funding provided by the Wells Fargo Foundation, TMC CC is launching a pilot program to support the hypothesis that a bank statement, cash flow analysis can provide equal or better repayment potential in order to increase access to capital for systematically excluded borrowers.
TMC CC was founded in 2018 by Barbara Morrison, a career-long Bay Area financial professional, who over her decades of work, observed and experienced the rampant and systemic exclusion that women faced in financial systems. Motivated by a vision for a more inclusive economy, and equipped with years of experience and knowledge, Barbara founded a small nonprofit aimed at serving the gaps she observed in affordable lending.
Founded with a lens of reducing gender discrimination, and rapidly growing through the pandemic to meet intersectional needs, TMC CC has developed its scope of understanding and grown its focus around addressing the racial wealth gap. Daniel Fernandez, TMC Community Capital’s CEO, remarked that,
“TMC CC is committed to understanding the systemic mechanisms of financial exclusion and creating innovative and sustainable solutions to challenge the credit approval status quo. This grant provides the necessary support for our team to continue pursuing new underwriting models. The evidence from our pilot program could help advance the CDFI industry’s practices and open the door to capital in new ways for even more entrepreneurs.”
According to the Consumer Financial Protection Bureau Office of Research (CFPBOR), there are estimated to be 45 million to 60 million consumers that lack sufficient history to generate reliable credit scores that can be used to predict their repayment risk. Understanding that credit invisibility is disproportionately rampant in communities that are majority nonwhite and seeking to bring more historically and systemically excluded people into our financial systems, TMC CC seeks to determine what is the least amount of documentation needed to predict ability to repay.
"In order to create a more inclusive economy, there is a real need to ensure that small business owners have access to capital,” said Jenny Flores, Head of Small Business Growth Philanthropy at Wells Fargo. “TMC CC’s innovative approach to lending will remove traditional obstacles and create pathways for more small businesses – especially women and racially or ethnically diverse entrepreneurs – to access the capital needed to grow their businesses, allowing them opportunities to build generational wealth, create local jobs and contribute to vibrant communities.”
TMC CC’s new model is focused on eliminating barriers, which include those of digital access and language. TMC CC’s application process can be completed entirely on a mobile device. Applicants can pick English or Spanish, upload all their documentation without ever needing a computer, and even receive updates and assistance through text messaging. The application asks for 6 months of bank statements, use of funds, and doesn't use FICO scoring to qualify or disqualify applicants. The review process is collaborative, offering opportunities for explanation and evaluation, as well as support and financial education assistance. This way, TMC CC meets applicants where they are at, and provides them with a loan package or business support referral that best fits the business owner’s needs.
With this new, lighter and more human-centric method of underwriting, TMC CC has been able to serve and fund their target markets with zero defaults to date. A statewide organization based in Oakland, TMC CC has deployed over $11 million to over 20 counties, serving a portfolio made up of borrowers who identify as 85% BIPOC, 90% LMI, and 50% Female.
About TMC Community Capital
TMC Community Capital is a nonprofit online microlender that provides fast and affordable financing, fosters financial stability, and encourages entrepreneurship among women-owned, low-income and under-resourced small businesses in California.
For more information, please visit www.tmccommunitycapital.org.
Contact:
Sachiko Moran
415-655-5469