Ensuring Access to Finance

As Dwight Evans has written in his book, Making Ideas Matter, he learned early in both neighborhood redevelopment and government that money makes a difference. Businesses, families, non-profits, and people all need money to succeed. Every neighborhood commercial center needs to include easy public access to real banking facilities – not exploitive financial substitutes. Community businesses and entrepreneurs need access to capital in an even broader sense.

Dwight Evans has been working to improve financial access for a long time. In 2004, Dwight helped to create the Helping Working Families Task Force; the Task Force’s final report, Dollars and Sense: Realistic ways policymakers can help Pennsylvania’s working families, was issued in January 2005. As a result, Dwight fought for additional funding for the Family Savings Account program. He also worked to ensure that Pennsylvanians receive sound credit counseling/debt management services with the passage of Act 117 of 2008 (HB 2294), the Debt Management Services Act.

Dwight Evans will continue in Congress to work to:

Ensure there is a bank at every neighborhood crossroad. In order to energize urban development in all neighborhoods, city officials, business owners, property developers, and non-profit institutions must work together to create strong local markets. Next Street Financial, based out of Boston and New York, offers a compelling model for how to connect small businesses with the large institutions, corporations, or nonprofits that can help them get big things done. Next Street works in partnership with ICIC, the leading authority on inner-city economies, to advise urban businesses on the strategies, organizational development, and marketing they will need to expand successfully in their communities. This kind of expertise enables them to transform communities by developing long-term strategies that make the most of local assets.

Provide access to capital and credit for small businesses by:

  • Providing loan guarantees for private banks to loan to struggling small businesses, enabling county funds to work with the financial community to leverage private-sector resources.
  • Establishing a nationwide Capital Access Program (CAP) to encourage banks to make loans available to small businesses, for startup and working capital lines of credit. Under CAPs, both borrowers and lenders pay a small fee matched by the government, to create a reserve account in case of defaults.
  • Creating a micro-lending fund to make capital available to businesses that do not have access to the traditional commercial banking sector.
  • Instituting a revolving loan fund to provide matching funds to companies and property owners seeking to renovate existing properties for laboratory space and to build new facilities.
  • Designing equity financing programs to help small and emerging businesses avoid excessive debt loads.
  • Launching early-stage seed financing programs to help entrepreneurs to protect their intellectual property, refine technologies, and write business plans.

Encourage neighborhood start-ups and entrepreneurs (particularly minority). We need a national small business start-up program targeting potential entrepreneurs in struggling neighborhoods. The program would provide business skills training, assistance with business plan development, and a microloan program that would provide loans of $50,000 or less. Similar to a program recently developed in Jacksonville, FL, this program would have an early detection system to flag those loans in danger of default and provide technical assistance to get the recipient back on track. The program would also have an outreach component to ensure people know about and take advantage of it.

Help low-and moderate-income families use individual development accounts to become self-sufficient and start their own businesses. We need to focus on helping families to grow their assets, not just their incomes. Individual development accounts (IDAs) are private savings accounts that can be used to pay for a first home, used for education or training, and to start a business, like IRAs, but they come along with a government match in order to encourage them. We should promote the use of IDAs as a way to increase savings and assist the start-up of a small business. I will work in Congress to provide a federal funding match.

Crack down on exploitative lending practices. I’ve worked hard to crack down on predatory “payday” lending in Pennsylvania, and we need to take this fight national. These unscrupulous practices especially target financially stressed military families on active duty – this should be a federal priority. We need federal payday loan legislation, including:

  • Requiring lending to be based upon the borrower’s ability to repay the loan.
  • Limiting monthly payments on consumer installment loans.
  • A minimum loan term of six months In order to give borrowers enough time to repay.
  • Requiring payday lending companies to pay a fee of one percent of all gross revenues into a fund to support no-cost, community-based financial literacy training, outreach, and basic financial planning services.
  • Limiting total payday loans to any one customer, in both number and dollar amount.
  • Requiring a seven-day “cooling off” period between the time a loan is “paid off” and a new loan is taken out.
  • Allowing borrowers to pay in installments.
  • Requiring payday lenders to provide loan counseling prior to every customer.
  • Establishing a database requiring payday lenders to report the details of these transactions to ensure compliance with consumer protections.

Work with the banking community to create low-cost banking services in underserved neighborhoods. California’s “Bank On” Initiative is a statewide program based on a successful initiative in San Francisco that has become a national model for getting working people access to conventional banking services. Participating banks profitably offer “starter” accounts for the unbanked that waive minimum balance requirements, accept alternative forms of identification, allow one free overdraft per year, and allow those with poor banking or credit history to open an account if they take a financial education course. Financial management counseling is provided to new customers to make the process less intimidating and confusing for the previously unbanked. This program needs to be replicated nationwide, and Congress and the Federal Reserve has the ability to make that happen.