Model and Strategy
Pacific Community Ventures (PCV) is a nonprofit community development finance institution (CDFI) that invests in small businesses with the potential to create good jobs for working people. Our model combines affordable loans with pro bono advising to small business owners, especially those who have had a hard time accessing capital, like women-identifying entrepreneurs, entrepreneurs of color, immigrant and refugee entrepreneurs, and business owners historically turned down for SBA or traditional bank loans. Our restorative capital loans range from $10,000 to $250,000, are offered at rates as low as 0% for up to 5 years, and include incentives to improve job quality for workers. This impact-first blended capital approach works to make sure that historically excluded communities are not once again left behind in the nascent economic recovery. To meet the needs of the most marginalized small business owners, PCV developed a character-based lending underwriting matrix, moving away from credit scores and tighter bank underwriting rules, to enable flexibility in evaluating credit packages.
Through September 2021, PCV has already set a new record of more than $7.1 million deployed across 101 small business loans this year, with 72% of the capital allocated to minority-owned businesses, 84% to woman and/or minority-owned businesses, and 85% going to small businesses located in and/or hiring from economically distressed areas. All PCV borrowers – and hundreds of other entrepreneurs – receive free one-on-one coaching through our national platform, BusinessAdvising.org. With a network of more than 2200 volunteer advisors, PCV offers free advising in finance, marketing, HR and over 30 more areas together comprising all aspects of running a business. Of the record 1375 small business owners advised so far in 2021 (336 in the Bay Area), 87% are women and/or people of color.
To address the challenge of accessing affordable capital faced by BIPOC small business owners in our own homebase community of Oakland, PCV is working to launch a 0% Restorative Capital Loan Fund for East Bay small businesses for loans up to $100,000 within the next 12 months, leveraging more than $4.3 million in lending capital awarded to PCV this year. Working with community partners like Black Cultural Zone, Feed the Hunger Fund, the Unity Council, ESO Ventures, and the office of the Mayor of Oakland, we will provide financing opportunities to underestimated BIPOC- and women-owned small businesses, particularly in areas like West and East Oakland.
Impact
People of color were launching 89% of all new businesses before COVID-19, while 2021 has seen the largest surge in new Black-owned businesses in decades. Yet entrepreneurs of color are more likely to suffer downward mobility because their businesses are more likely to fail, due to systemic bias in lending and a gap in access to affordable advice, or safety nets to fall back on. This is where PCV comes in.
By providing loans of up to $250,000 at rates as low as 0%, on patient terms of up to 5 years; access to our BusinessAdvising.org platform; and small grants each time a borrower implements an attribute of a dignified good job, we expect to work with more than 2,000 small businesses in the Bay Area across the next 5 years, the vast majority of which will be BIPOC- and women-owned, and help them improve the quality of jobs that they offer.
Using a first-of-its-kind measurable definition of a good job, we consider five dimensions of job quality: living wage, basic benefits, career-building opportunities, wealth-building opportunities, and a fair & engaging workplace. In 2020, among our portfolio businesses the median revenue was $160,094 and the average number of employees was 5. Despite the pandemic, 40% of our small business owners reported revenue increases, while 67% managed to avoid job losses. In addition, 63% of our borrowers from 2019 and earlier reported offering health benefits in 2020 to their full-time staff, up from 35% the prior year.
Leadership
-
Bulbul Gupta
President & CEO
-
Tamika Otis
Director of Business Advising