At the national level and in our own communities, we’ve been closely watching the movement to change the way business investment happens. The traditional investment frameworks that favored profit at the expense of community health are being challenged by a growing social conscience to give all communities equitable finance, and small-scale makers and manufacturers are already benefiting from this.

UMA launched our Pathways to Patient Capital program because we know there are local and regional organizations that bring that conscience to their work every day. They’re guiding loan funds, grants, and services that make business capital more just and more equitable, particularly for entrepreneurs from diverse communities that create and sell a physical product, and have unique business needs tied to production.

In a recent webinar we brought together some of the key figures behind these programs to tell us about their work building up and changing our perceptions of “capital readiness.” Each brought their own set of model success stories and perspectives on how to influence the role that lenders and other investors play in communities. 

Anna Marie Cruz told us about her work connecting entrepreneurs with gateway capital as the Western Regional Manager of the Initiative for a Competitive Inner City’s (ICIC) Inner City Capital Connections program. Christopher Van Bergen, Chief Financial & Operating Officer at Nest, told us about how his internationally-focused organization has embarked on national initiatives to help U.S. makers develop into full-fledged businesses. And Anthony J. Young, the Executive-in-Residence at Epicenter Memphis, shared how his organization is helping entrepreneurs get access to local financial support that they didn’t know existed, and even help with personal wellness to manage the stresses of entrepreneurship.

We encourage you to watch the entire presentation here, as an email blast won’t do justice to the great models and concepts that were discussed at length. But below are a couple highlights from the webinar that stood out to UMA as powerful and timely suggestions.

• We have to push financial institutions to embrace fair and just risk assessments that meet entrepreneurs where they have experience. Not investing in entrepreneurs because they lack the trademarks of a financial system they’ve never had access to only worsens inequity.

Anna Marie Cruz of ICIC say it’s about adopting a thought process that promotes inclusive underwriting approaches. ICIC holds regular calls with banks, local government, and non-profits the communities where they work to make sure financial institutions are aware of the needs of local entrepreneurs, and try to influence how those financial institutions engage and assess potential clients.

Anthony Young of Epicenter Memphis brought up “character-based lending,” which means looking at characteristics beyond credit score. Those characteristics could be described through letters from friends and families that attest to their trustworthiness, an analysis of the social capital they have in their neighborhood, and the potential cultural and economic impact that their business would have with a lender or investor’s support. 

“How many months in a row have they paid their rent?” asked Young, suggesting additional metrics. “How many months have they paid their cell phone bill?” Marie Cruz noted that organizations like Kiva and the Jewish Free Loan Association do look at social capital and family references when working with clients.

• Makers, manufacturers, and creative entrepreneurs often don’t understand what resources are best suited for them, and how investments can open up the gates to different kinds of capital later on. If service providers have a goal of promoting financial equity in their communities, they should take on the responsibility of educating local entrepreneurs about their financing options so they can envision the potential paths within their business’s reach.

“We try to make sure all our entrepreneurs know which CDFIs exist in our city, and what kinds of services they offer,” said Young. Epicenter’s interactions with capital service providers also help them identify what capital gaps are out there. After speaking with lenders and local banks, said Young, they decided to launch a $5,000 micro-loan fund because they realized it was a dollar amount needed by local entrepreneurs that financial institutions weren’t offering.

Christopher Van Bergen of Nest takes a similar approach: his organization maps out both the maker ecosystem in the U.S. cities they work in, and the ecosystem of service providers that those makers can benefit from. That creates a structure of knowledge that both service providers and makers can access to understand what’s going on in the entrepreneurial world where they live. “While we’re doing that we’re also understanding makers and what their specific needs are,” said Van Bergen. 

• Equitable investing is not just about supporting businesses—it’s about supporting the people behind them. While this is always true, it should be doubled-down on during and following the COVID-19 pandemic. The economic crisis caused by this unprecedented event is likely to linger and trickle down to the neighborhood level far after it ends.

Epicenter Memphis has recently launched a self care and wellness program that originated from in-house wellness coaching initiatives. They’re now connecting local entrepreneurs with a wellness coach via teleconference calls who helps them manage their emotional health. 

“There’s a lot of stress and anxiety that small business owners go through,” said Young. “Until they take care of themselves, I can’t talk to them about debt.”

We invited these presenters to speak because they have time-tested models and impact data that backs them, but results don’t come from their efforts alone. Each placed emphasis on the importance of working with and among local partners to achieve equitable results—even if that means handing off a client to someone better equipped than themselves. “What other needs are there that can be addressed with other organizations or our own capacity?” asked Anna Marie Cruz of ICIC. Success for the entrepreneur—and success for their community—should always be the end goal, “even if it’s not happening at your organization.”