Co-op Capital, Nusenda’s community microloan program, increases access to affordable capital for women, entrepreneurs of color, low-income populations, and Indigenous Communities. Nusenda Credit Union understands that the current health and economic emergency requires us to act with urgency, adaptivity, and in cooperation with our partners across central and northern New Mexico. With this in mind, we are leveraging the infrastructure of our Co-op Capital program to increase access to capital and loan management including the credit unions infrastructure to our borrowers and community-based partners during the pandemic.

Through this program, borrowers access loans from trusted community organizations with which they already have a relationship. These organizations authorize loans based on their unique knowledge of the person’s character and goals. Nusenda disburses the loans and provides support through the life of the relationship, including loan origination, servicing, and credit reporting. Together, we provide financial education and wraparound borrower supports to ensure successful repayment.

Part of our adaptivity and innovation comes from how we use a collective collateral model. Partner organizations provide 10% of the collateral through a savings account, Nusenda provides 20%, and philanthropy provides the remaining 70% through grants or program related investments. As borrowers repay their loans, collateral is replenished and more borrowers gain access to loans, creating a revolving collateral fund (rather than a revolving loan fund). With a 100% repayment rate to date, this model demonstrates that low-income individuals, those without credit, and those who are rebuilding credit, are bankable, democratizes access to capital, and invites innovative investment from philanthropic partners.

Grants are also central to the successful implementation of Co-op Capital. The Nusenda Credit Union Foundation raised money, beyond what was needed to collateralize loans, so that we could provide capacity grants to our partners to devote the additional time and staff needed to successfully implement the program. With the help from two Co-op Capital consultants, Sandra Ortsman and Vanessa Roanhorse, we worked with our community partners to frame data collection and reporting questions so that they felt generative and non-intrusive to borrowers. These two things have nurtured positive relationships with our community-based partners, and given them ownership of the program. Our partners have demonstrated organizational efficacy by raising funds to expand Co-op Capital’s overall collateral beyond the 10% required.

To date, Nusenda has partnered with eleven community organizations and funded over 100 loans funded through Co-op Capital. Our community partners represent an expansive range of sectors and identities: from launching digital businesses to food entrepreneurs to immigrant families to Native American entrepreneurs and more.

Before COVID-19, Co-op Capital proved the value of supporting asset building with low-income and institutionally underserved populations through innovative lending. In the midst of COVID-19, we are doubling down on our commitment to this work.

In the wake of the pandemic, our goal is to: fund all new co-op capital loans within 24 hours of approval; lowering Co-op Capital interest rates to 0% (from the standard of 5%) for new loans of $5,000 or less; allowing borrowers who have paid down their principal to $5,000 or less to refinance at 0%; and giving borrowers the option to cease payments for up to 60 days (the first payment is normally due after 90 days).

We are also working with some of our community partners to expand their loan criteria to include a wider variety of purposes. We are working with our partners at Change Labs, a Native-run nonprofit organization based on the Navajo and Hopi Nations supporting Native American small businesses, to expand criteria to include entrepreneurs who are not graduates of their cohort.

To support our partner organizations that have lost revenue due to COVID-19, we are accelerating capacity-building subgrants and providing additional collateral so that they can raise their lending threshold to meet increased loan demand. We are also supporting revenue-building efforts, such as, the SBA’s Payroll Protection Program. Our ability to quickly get funding into the hands of those most directly impacted, has increased the interest and demand for us to scale the Co-op Capital, so we’re beginning to seek new partners in resourcing this work. We’re also hopeful that our peers in the asset funding ecosystem will be inspired by what we’ve achieved and learned.

Our 100% repayment rate demonstrates that low-income community members, and particularly underrepresented communities like Native American, immigrant, and female entrepreneurs, are highly bankable. We want funders and other financial institutions to recognize this and for funders to increase their grant making to community-based organizations led by these constituencies, and for financial institutions to review and remove unintended barriers caused by their lending practices.

Sara Keller, Nusenda Credit Union, Vice President of Community Engagement, has served as the New Mexico Asset Funders Network co-chair since 2017 and is a founding member of the NMAFN chapter.