More than a loan, a form of advocacy
The first post in Inclusive Action’s “Doing Capital Differently” series, offering stories, lessons, and tips to financial services and CDFI practitioners, from our experience of providing capital to underserved communities. Subscribe to the series!
by Director, Lending Andrea Avila, and Associate, Technical Assistance Luis Moran
Edwin’s Story: Loan Readiness to Business Growth
Having recently migrated to the US with his brother and sister, Edwin Oritz and his family dreamed of opening up a business here and providing for their family. The Ortiz family came to our team at Inclusive Action when they heard about our resources to access capital.
However, they weren’t familiar with how business loans work. So our team didn’t just take their application —the business coach assigned to Edwin’s application helped him with loan readiness — supporting him in navigating the application process through a dedicated and customized onboarding and interview process.
Once Edwin received the loan, we provided business coaching, including support with branding, tracking his sales, and breaking down the costs of his products including pupusas, panes con pollo, and aguas frescas. After attending our Catering 101 workshop in early January, Edwin took the leap to begin offering catering services to his customers. We didn’t stop there — we connected him with our partners for catering opportunities to help him grow as a business owner and expand his business. This included connections to organizations such as Cunningham Architecture Firm for their luncheons and non-profits like the Latino Community Foundation who hired Edwin and his family for catering services for their receptions and ceremonies. These valuable connections and support not only serve as an additional source of business income but also significantly contribute to Edwin’s experience and growth as a business owner.
This year, Edwin opened Jenny’s Kitchen, a Salvadorean restaurant in Whittier. They serve delicious food like pupusas, pan con pollo, and even their own style of hamburgers.
Jenny and her younger brother, Edwin Ortiz, work as a family unit, supporting one another as a team. Growing up as kids in El Salvador, Jenny and Edwin strive to bring their family’s flavorful dishes and recipes and share them with the rest of the world. April 2024.
Going Beyond: A Nurturing Approach to Capital Access
Applying for a loan is already a complicated experience, and it’s even more complicated when you’ve been the victim of predatory lending, don’t speak English as a native language, or have been rejected in the past for unclear reasons. The tough reality is that loan applications make people evaluate their financial situation, which we’ve seen can affect self-esteem.
Our clients often come to us as a last resort, hoping that we can view them as individuals and not based solely on numbers. In turn, we see the loan fund as a form of advocacy, a way to provide business owners with capital while also making progress toward the grand goal of financial inclusion for small business owners across Los Angeles.
We’ve worked hard to develop a lending process that understands the trauma that many of our clients have experienced while ensuring they have the tools, resources, and confidence to navigate the broader financing ecosystem.
Here are four things we’ve done with our program:
1. We provide trauma-informed, one-on-one support throughout the application process.
Many lending processes inadvertently or even deliberately can shame small business owners. It can be common for our clients to have limited knowledge of business accounting practices, permits, and the tax system, and some have unstable and uncertain living situations. For most of them, this will be their first loan.
We’ve carefully designed our application process to ensure that people feel comfortable. For example, applicants do not fill out an application by themselves. Our business coaches work together with applicants in a conversation-style format, allowing them to ask clarifying questions and get support where needed.
What we’ve found is that this allows people to feel comfortable and open up about their lived experiences. This enables us to better understand their situation and provide the most effective assistance. Sometimes, clients just want someone to talk to, and we as technical assistants are there to hear them out and better understand their needs.
2. A loan is never just that. We provide wrap-around support — including personal rent relief and referrals for business legal guidance.
At Inclusive Action, we’re not in the business of providing loans for the sake of providing loans. Our goal with all of our clients is to create financial stability. That’s why our loans come with wrap-around support. This means that during the intake process, we refer our clients to partner organizations to assist with other basic needs, so they can be ready to financially take on a business loan, and formalize and stabilize their business in the process.
We developed these services because the traditional financial system is not very accessible. Financial products often come with a lot of jargon — everything from interest rates to refinancing — that can be daunting for everyday folks. We’ve found that the best way for our clients to follow through with a loan is for us to walk them through the process. We assign a dedicated Business Coach to walk them through the process and answer questions.
As we go through the interview process, we sometimes find they need additional support in key areas.
While their initial intention was not to refinance that debt, we help them see the long-term benefits of refinancing and saving money on payments and interest, even if the results aren’t visible right away. (In our next blog post in this series, we’ll talk about this example in a lot more detail.)
We’ve also developed a network of partners that can offer other services, such as legal support, utility assistance, and food banks. In our database, we categorize each partner so that we can be sure to match clients with the best partner for their needs. The database and network are an ongoing process, and we’re regularly evaluating our success based on client feedback and making modifications when needed.
3. We carefully hire technical assistants whose backgrounds and life experiences reflect the communities we work with.
What we've learned is that so much of the lending process is built on trust, and trust often starts with seeing yourself and what you value represented in the organization and the people from whom you’re seeking a loan.
The authors of this post come from a family of small business owners. Andrea’s family migrated from Colombia in the 90s and continues to maintain their small businesses successfully. Luis’s family runs Torta Movil, a Mexican Food Truck in South LA recently named one of the best sandwich shops in LA, working with his family every weekend.
We're proud to say that our access to capital team has diverse backgrounds not often prioritized in the larger finance industry. This includes lived experiences in the communities we serve, they are first or second-generation immigrants, and they have business experience or even a small business of their own. This matters a lot for our clients, who feel more ready to trust us and be vulnerable about their needs.
4. We see our loans as the beginning of a journey toward greater financial inclusion.
A loan with Inclusive Action is just the beginning of our client’s journey in the financing ecosystem. We hope that our clients grow from our loan, to then apply to other options, with more experience and without the fear of being lost in a complex system.
The one-on-one support goes a long way. Our associates become trusted advisors, serving as a point of contact whenever they have doubts or questions regarding their business. Many of our clients view us as more than a business coach, and even as a friend, who is there to support them through their journey.
Stay tuned for more from the “Doing Capital Differently” series. In our next post, we’ll be talking more about credit card debt and how we help our clients refinance their loans. Subscribe to get alerts!