In a crisis such as COVID-19, small businesses, nonprofits, and individuals without savings are the first to be impacted. According to FEMA, 40% of small businesses do not reopen after a disaster. Of those that do, 25% fail within a year. Four in 10 adults can’t cover an emergency expense of $400 or more. Less than half of nonprofits have one month of operating reserves and less than six months of cash to keep them running.
Community Development Financial Institutions such as CommunityWorks Carolina tend to be the first responders to community financial needs. Because CDFI’s are nimble and flexible, they can deploy capital quickly where it is needed most. During the housing crisis and natural disasters here in South Carolina, CommunityWorks was a leader in creating financial products and coaching to help nonprofits, small businesses and vulnerable populations. COVID-19 is no different.
Foundations, corporations, and individual investors can respond to community financial needs by making an investment in CommunityWorks. CommunityWorks has the capital to lend to community members, and it has the staff and expertise to deploy these funds in a timely manner. However, it needs need support from philanthropy, individuals, foundations and financial institutions to help set up a special loan loss reserve to back stop any losses and to protect borrowers and CommunityWorks long term.
Support can be in the form of direct contributions or as 0-2% Percent Short Term Program Related Investment (PRI) with an option for interest deferral or loan forgiveness.
This will allow CommunityWorks to offer the following to support small businesses, nonprofit partners and consumers to meet immediate needs.
- COVID-19 Small Business Relief Fund Line of Credit for small businesses: up to $10,000
- COVID-19 Community (nonprofit) Relief Fund Line of Credit to help nonprofit partners: up to $50,000 unsecured and $250,000 secured
- COVID-19 Consumer Relief Fund loan to help with emergencies: up to $1,500 in partnership with Self Help Credit Union.
Learn more about the fund and ways investors can participate.