Gabriel Villarreal of Opportunity Fund (a Small Business Borrower’s Bill of Rights founder) got the chance to sit down with Mark Rockefeller, co-founder of the small business lender StreetShares. StreetShares has been a signatory of the Small Business Borrowers Bill of Rights since 2015.  
 
Mark Rockefeller is passionate about the veteran community. Following a breakfast at a local diner with his cofounder and fellow veteran Mickey Konson, StreetShares launched in 2013 with the goal of funding veteran-owned small businesses by building on the strong bonds of loyalty that run deep within the veteran community. According to their website, “StreetShares brings together business owners in search of funding and investors looking for both financial and social returns. In the end, business owners get the best deal possible, and investors earn a solid return while supporting American small business - everybody wins.” How StreetShares came into being, and developed its unique “affinity-based lending model” is a story of dedication to and respect for those who have served our country.
 
Mark, Mickey, and the StreetShares team support a long-standing tradition of veteran small business ownership. Mark came back from Iraq in the summer of 2008 looking to continue his life here in the States after years of service. According to him, “I am just one guy who’s representative of a generation of veterans who, following a long-standing historical trend, would leave the service and go and start a business.” According to Mark, “There was one study out of Syracuse that found that 49% of World War II veterans went on to either own or manage a small business at some point in their lives. That’s a HUGE number.” However, unique to Mark’s generation of veterans, many of whom served in Iraq and Afghanistan, the 2008 financial crisis happened right when many service members were ending their terms. This created a unique barrier to a well-trod path to economic stability. During these times of crisis, veterans often turn to each other for support, and that is how StreetShares got its start.  
 
“My co-founder and I had this shared idea of affinity based lending,” Mark stated. Affinity lending works by, “…focusing on a community and providing lending capital to the borrower that also comes from the same community.” Building on the same principles employed by large small-dollar lending institutions like Kiva and Grameen Bank, borrowers feel, “an enhanced sense of obligation or accountability because of where the money comes from.” In the case of StreetShares, loan capital is raised from retail investors who are either active duty military members, family of military members, or general supporters of the military. Loans provided to veteran borrowers include a layer of the loan capital from this community. The affinity factor structured into these loans actually allows them to charge lower interest rates because of higher repayment rates from their veteran borrowers.
 
Why does this work? According to Mark, “… I saw the incredible things that veterans did for each other on the battlefield and theorized that you could apply this to finance. You could harness or capture that loyalty.” His cofounder had a complementary perspective. Coming from the world of finance, he had personal experience with the use of affinities in credit card lending and the successes of firefighters union and alumni group based credit products. Cross these levels of expertise with the around 22 million veterans in the United States; 60 million in the community if you include active duty and their families, guard, and reserves; and you have a large investment base with strong connections to the very people that you are trying to serve.
 
Mark sees what StreetShares does as an essential service to the veteran community, not just because they are providing access to capital, but because they are providing responsible access to capital. Veterans face structural barriers to accessing capital including credit scores that are impacted by being enrolled in service. The act of deployment and constant moving make it challenging for service members to build a solid history of repayment. Upon the end of their terms, this lack of positive credit history makes it particularly difficult to access capital from traditional financial institutions, leaving them vulnerable to predatory small business lenders. This led the StreetShares team to sign on to the Small Business Borrowers Bill of Rights. “We were an early adopter… we looked at the principles, they were really things that we all did anyways; we didn’t have to change our operations one bit. It was a nice articulation of the standards that we live by and it made sense for us to get involved.”
 
Moving forward, Mark said that the education of small business owners, government regulators, and policymakers are key next steps for the Small Business Borrower’s Bill of Rights. His worry is that bad actors within the small business lending industry will come under enough public scrutiny to give all online lenders a bad name. StreetShares’ mission and track record clearly demonstrate that responsible lending can be done online.
 
We thank StreetShares for taking the time to talk with us about their business model and the importance of the Small Business Borrower’s Bill of Rights in the small business lending Industry. 
 
If you are interested in learning more about the Small Business Borrower’s Bill of Rights please email info@responsiblebusinesslending.org.
 
If your organization is currently a signatory or endorser of the Small Business Borrower’s Bill of Rights and would like to be featured in our blog, please contact Gabriel at Gabriel@opportunityfund.org.

Gabriel Villarreal of Opportunity Fund (a Small Business Borrower’s Bill of Rights founder) got the chance to sit down with Heidi Pickman, Communications and Policy Manager at the California Association of Microenterprise Opportunity (CAMEO) . CAMEO has been an endorser of the Small Business Borrowers Bill of Rights since 2015.  
 
CAMEO is a small but mighty team of passionate small business advocates that have been advancing the causes and interests of microenterprises and entrepreneurs since 1993. A California based statewide micro-business network and membership association, CAMEO is made up of over 220 organizations, agencies, and individuals. Their mission? To grow a healthy, vibrant, and thriving environment for all entrepreneurs and start-up businesses by advancing the work of their statewide member organizations. Their vision? To create economic opportunity for all entrepreneurs and to build strong California communities.
 
CAMEO first heard of the Small Business Borrower’s Bill of Rights through their small business advocacy work. CAMEO worked closely with Opportunity Fund, a founding member of the Rights, on state legislation that would make it easier for small business lenders to pay referral fees to non-profits for clients sent their way, thus easing access to responsible, affordable capital. As a comprehensive resource for small and micro-businesses CAMEO had been watching the growth of the online lending industry with both hope and caution. They saw both potential positive outcomes and potential negative consequences. When the opportunity to become an endorser of the Rights came along, Heidi recalls, “We immediately signed on because it was sort-of a no brainer and we decided that people needed to have good information about what loans they’re getting.  [Online lending] is happening and this is going to be a big shift in the way that things are done, and we need to make sure our members have an awareness of it.”
 
In terms of the culture within their membership network at the time, Heidi reflected that they saw “A lot of resistance to automating people’s lending process, but I think we’ve turned that corner. People have realized they have to do some kind of automating.” Heidi went on to talk about both the costs and benefits of online lending and how it seems that the industry has indeed made a shift and entered the mainstream. The focus now is to make sure that small business borrowers, particularly borrowers from vulnerable communities have the information and the education to know the terms and risks of the loan that they are getting.
 
Given this passion for addressing and serving the needs of small businesses, we asked Heidi what was so essential about small businesses being a part of California’s economy. In response, she said “Small businesses and local businesses are what makes place and what makes a community. They form the basis of a community, or else you are living in the Truman Show where everything is sort of fabricated and made up for you… The stronger your local businesses the stronger your local community is.” One of Heidi’s favorite success stories that CAMEO has been able to facilitate is that of a small taqueria in Watsonville, owned by a family of agricultural workers with a special needs child. They started with a farmers market stand and then opened a brick and mortar, eventually expanding to a second location with the help of business assistance from El Pajaro Community Development Corp,, a CAMEO member. “The family has defined their own success and are able to take care of their family without doing backbreaking work,” says Heidi.
 
This is the power of small businesses, to define and create success for an individual, a family, and a community. CAMEO has been supporting this success all over California and the nation for over two decades by advocating for common sense small business policies and a healthy entrepreneurial ecosystem in California and Washington DC. CAMEO understands the connection between small business success and public policy, and is here to make sure that entrepreneurs can thrive.  
 
We thank CAMEO for taking the time to talk with us about their advocacy work and the importance of the Small Business Borrower’s Bill of Rights in the small business lending Industry.
 
If you are interested in learning more about the Small Business Borrower’s Bill of Rights please email info@responsiblebusinesslending.org.
 
If your organization is currently a signatory or endorser of the Small Business Borrower’s Bill of Rights and would like to be featured in our blog, please contact Gabriel at Gabriel@opportunityfund.org.