Gabriel Villarreal of Opportunity Fund (a Small Business Borrowers’ Bill of Rights founder) sat down for a conversation with Dory Rand, President of Woodstock Institute. The organization became an Endorser of the Rights in May 2018.
Woodstock Institute is a leading nonprofit research and policy organization working in the areas of fair lending, wealth creation, and financial systems reform. Woodstock Institute works, “to create a financial system in which lower-wealth persons and communities of color can safely borrow, save, and build wealth so that they can achieve economic security and community prosperity.” Founded in 1973 in its namesake town of Woodstock, Illinois, the organization is now housed in the metropolitan center of Chicago. Its President, Dory Rand, is a longtime advocate for marginalized communities.
“I was actually acquainted with Woodstock long before I was ever an employee here,” says Dory. “In 1997, I was doing poverty law, dealing with the rollout of electronically delivered public benefits, and we realized that this was actually a great opportunity to expand access to bank accounts and other financial services to low-income families.” She worked with Woodstock on various financial services initiatives before formally joining the organization as its President in 2008. Since that time, she has overseen the expansion of several initiatives related to financial services, including a deep-dive into the state of small business lending. “Policy and research have always been the central focus for Woodstock,” says Dory.
One of Woodstock’s signature research initiatives in the past couple of years has been publication of a series of reports called Patterns of Disparity which, in collaboration with several other community-based organizations, examines Community Reinvestment Act (CRA) reported small business loans by banks in different regions of the country. In the absence of a comprehensive data set examining all small business lending nationwide, this research gives a comprehensive snapshot of the state of small business lending by banks, particularly in low- and moderate-income (LMI) and minority census tracts. These widely cited reports found that, in different regions of the country from Los Angeles to Detroit to Buffalo, there has been a pronounced decrease in both the number and dollar amount of small business loans in LMI and minority census tracts. “What really got to us was hearing the stories of folks who had turned to non-bank online lenders with really high costs and complex terms and got trapped in debt just like consumers who get trapped by payday loans,” says Dory.
It is these concerns about high-cost lending that led Woodstock to engage with the Responsible Business Lending Coalition and, ultimately, sign the Small Business Borrowers Bill of Rights (the Rights). “Our friends at ACCION Chicago looped us in and that’s where we met Opportunity Fund, Small Business Majority, and some of the financial technology firms (fintechs) like Lending Club,” says Dory. “I thought it was really positive that people were trying to set a higher standard for fair small business lending.”
Dory also noted the ripple effect that the Rights have had on the small business lending industry as a whole: “I saw a pretty quick evolution in how other members of the fintech industry looked at their own practices…. Early conversations with some of the high-cost fintech lenders were pretty one-sided when we brought up APR disclosures and ability-to-repay standards. The Rights have forced some of these groups, even if they are not signatories, to change their practices and start providing better disclosures.”
This positive momentum is made possible, in part, by groups such as Woodstock Institute, whose research and policy work moves the small business lending industry in a more equitable and transparent direction.
We thank Woodstock Institute for taking the time to talk with us about its research 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 [email protected].
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 [email protected].
Woodstock Institute is a leading nonprofit research and policy organization working in the areas of fair lending, wealth creation, and financial systems reform. Woodstock Institute works, “to create a financial system in which lower-wealth persons and communities of color can safely borrow, save, and build wealth so that they can achieve economic security and community prosperity.” Founded in 1973 in its namesake town of Woodstock, Illinois, the organization is now housed in the metropolitan center of Chicago. Its President, Dory Rand, is a longtime advocate for marginalized communities.
“I was actually acquainted with Woodstock long before I was ever an employee here,” says Dory. “In 1997, I was doing poverty law, dealing with the rollout of electronically delivered public benefits, and we realized that this was actually a great opportunity to expand access to bank accounts and other financial services to low-income families.” She worked with Woodstock on various financial services initiatives before formally joining the organization as its President in 2008. Since that time, she has overseen the expansion of several initiatives related to financial services, including a deep-dive into the state of small business lending. “Policy and research have always been the central focus for Woodstock,” says Dory.
One of Woodstock’s signature research initiatives in the past couple of years has been publication of a series of reports called Patterns of Disparity which, in collaboration with several other community-based organizations, examines Community Reinvestment Act (CRA) reported small business loans by banks in different regions of the country. In the absence of a comprehensive data set examining all small business lending nationwide, this research gives a comprehensive snapshot of the state of small business lending by banks, particularly in low- and moderate-income (LMI) and minority census tracts. These widely cited reports found that, in different regions of the country from Los Angeles to Detroit to Buffalo, there has been a pronounced decrease in both the number and dollar amount of small business loans in LMI and minority census tracts. “What really got to us was hearing the stories of folks who had turned to non-bank online lenders with really high costs and complex terms and got trapped in debt just like consumers who get trapped by payday loans,” says Dory.
It is these concerns about high-cost lending that led Woodstock to engage with the Responsible Business Lending Coalition and, ultimately, sign the Small Business Borrowers Bill of Rights (the Rights). “Our friends at ACCION Chicago looped us in and that’s where we met Opportunity Fund, Small Business Majority, and some of the financial technology firms (fintechs) like Lending Club,” says Dory. “I thought it was really positive that people were trying to set a higher standard for fair small business lending.”
Dory also noted the ripple effect that the Rights have had on the small business lending industry as a whole: “I saw a pretty quick evolution in how other members of the fintech industry looked at their own practices…. Early conversations with some of the high-cost fintech lenders were pretty one-sided when we brought up APR disclosures and ability-to-repay standards. The Rights have forced some of these groups, even if they are not signatories, to change their practices and start providing better disclosures.”
This positive momentum is made possible, in part, by groups such as Woodstock Institute, whose research and policy work moves the small business lending industry in a more equitable and transparent direction.
We thank Woodstock Institute for taking the time to talk with us about its research 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 [email protected].
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 [email protected].
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