The Association for Black Economic Power (ABEP) in Minneapolis is calling out racial economic oppression for what it is—and centering the conversation of economic mobility as one of justice. As one very obvious example, to combat the proliferation of payday lenders on the northside of Minneapolis, ABEP piloted an alternative tool: $500 no-interest Liberation Loans, repayable over 12 months. It was a success and they plan to offer them again on a wider scale beginning this summer. In addition to being less expensive than payday loans, they help borrowers build or repair their credit.
“At the same time, we’re asking ourselves and our community what ‘paying it back’ even means,” says Samantha Lee Pree-Stinson, the new executive director of ABEP. “In the case of a zero-interest loan, we’re asking if borrowers can contribute in some other ways that add value to the community. For instance, if they own a business, can they host an intern?”
Pree-Stinson wants to push the boundary in thinking about what’s possible. ABEP should be a testing ground, she says, for trying new models of economic participation and wealth-building that traditional institutions are afraid to try to to invest in.
The organization is poised to launch a credit union in order to pool the savings power of the community and help un- and under-banked folks. They are in the process of capitalizing the credit union, Village Financial, with an initial infusion of $500,000 from city government and a plan to raise $15 million over five to seven years from city philanthropies and local depositors. Village Financial will be both a way to keep cash in the community and a tool for innovating community capital- and wealth-building opportunities. “We have purchased some county property to develop in cooperative housing,” Pree-Stinson says. “A lot of folks won’t have the buy-in funds for their share, so we’re developing a co-op loan that will allow them to participate with a very small initial contribution. That’s not something any other bank is going to do.”
Pree-Stinson says they’re also changing the narrative on deploying capital in the community, especially among businesses and entrepreneurs. She and her colleagues have succeeded in getting other lenders to share their underwriting approach so that ABEP can understand how the communities it’s lending in are being rated. “There’s lots of money and programming available for new or growing businesses,” she says. “But when we look at who benefits from the capital and the support, it’s not our communities at all. Everyone talks about how so-and-so is a risky borrower because of X, Y, or Z reason. We’re creating a risk assessment tool that flips how we’re currently doing it. It looks at communities that are most vulnerable and asks the question: What’s the risk if we don’t invest here, in this person, in this business? And now we’re putting pressure on them to use our tool to evaluate requests for capital.”
Pree-Stinson wants ABEP to continue pushing boundaries like these in Minneapolis. “We should be a testing ground for trying new models that folks are afraid to try, or to invest in,” she says.
This case study was co-authored by Mark Foggin and Johnny Magdaleno and published in 2020 as part of the Urban Manufacturing Alliance’s “Forging Fairness: How community-based lenders are centering both inclusion and manufacturing to promote equity [link to report].” This report highlights the work of practitioners in UMA’s Pathways to Patient Capital cohort, and approaches these leaders are taking to help entrepreneurs of color–including makers and manufacturers–get access to the capital and know-how they need to realize their business ideas and plans at scale.