The Southern Reparations Loan Fund (SRLF), a project of the Southern Grassroots Economies Project (SGEP), makes business loans to cooperatively owned businesses anchored in the most marginalized Southern communities. We especially focus our lending toward start-ups and expansions of democratically governed enterprises that meet the needs and elevate the quality of life of African Americans, immigrants, and poor whites. Our goal is to nurture the development of businesses that maximize community benefit, rather than the narrow concept of maximizing profit. The concept of reparations is at the heart of SRLF’s mission: SRLF moves capital stemming from an economy rooted in extraction, exploitation, slavery, and land grabs to build Southern enterprises that are owned and democratically controlled by the very communities from which the wealth was stolen in the first place.
As part of of our commitment to the most marginalized communities, we target our lending to projects that other lenders might consider “un-bankable,” because they are too small, not adequately collateralized, or, though profitable, not “profitable enough.” Operating from a principle of “radical inclusivity,” SRLF is interested in projects that are based on sound business ideas that meet real community needs, businesses built by people who know how to work together to get good things accomplished—regardless of their individual “credit-worthiness.” If SRLF does its job according to its mission, the vast majority of our loans will go to poor people who have a direct personal and community-wide stake in building an inclusive economy that is democratic, just, and sustainable.
SRLF intends to mitigate the risk associated with lending to non-traditional borrowers by partnering businesses with close-at-hand technical support provided by proven coop business developers, who will work side-by-side with owners to provide help in such areas as market analysis, feasibility studies, financial projections, and business planning. In many cases, lending will occur in stages, between cycles of technical support designed to help coops move the next step of readiness to make productive use of loan funds. It is this conscious joining of technical assistance with lending that distinguishes the SRLF from many other coop or social enterprise loan funds.
The decision of whether and when to make a loan will be based on an assessment of the business’s fit with SRLF’s mission and on the enterprise’s readiness to achieve financial sustainability with the loan. All loans will be made following the principle of non-extractive finance: in no way will repayment of the loan or interest require the impoverishment of the individual owners of the business or otherwise deplete the community. One way this will manifest itself is loan repayment plans and royalty terms based on the profitability of the business. That is, payments back to SRLF only happen when the business is able to cover its cost of operations and pay its workers a decent wage. This approach requires a very close partnership between the lender and the borrowing business, facilitated through the technical assistance provider.
In 2015-2016, SRLF is launching a year-long pilot process in which it is developing its lending guidelines and processes while cultivating the capacities of its technical assistance partners. To test its approach, SRLF expects to make loans to at least three qualifying coops by the end of the pilot year. Our purpose in this pilot year is to not only support selected cooperative businesses, but also to learn as much as we can about lending and the technical assistance needed to support healthy business development. The many partner groups of the Southern Grassroots Economies Project will serve as the core of the technical assistance team, but we are seeking additional partnerships for areas of the South where we do not yet have partners.
SRLF has been granted $150,000 by the Fund for Democratic Communities to use as loan capital during the pilot year; we are seeking additional investments from foundations and individuals who are willing to contribute gift capital—to support loan fund operations and loan loss reserves—and/or investment capital for loans.
If you are interested in investing in the SRLF, please contact Marnie Thompson (336-543-6362, [email protected]) or Ed Whitfield (336-541-4317, [email protected]). If you know of a cooperative enterprise in the South that needs a loan, contact Nikki Marin Baena (828-713-8700, [email protected]).