• Community Credit Lab

MORTAR's Character Based Lending Program for Entrepreneurs

Updated: Aug 4


MORTAR is showing us what’s possible when entrepreneurs can access the affordable capital they need to keep building their businesses and supporting their local community



This lending program aims to show that when entrepreneurs and small businesses receive personalized support with capital that matches their needs, they will thrive. Rather than relying on credit scores and other underwriting practices that have been shown to exclude BIPOC entrepreneurs, this "Character Based Lending" program will rely on trust and relationships between MORTAR and businesses in their network.


Background Context


At Community Credit Lab, we believe that it’s possible to shift the financial system to prioritize humanity. At its core, this requires shifting money and shifting power to businesses and ecosystems that have, and continue to be, financially under-resourced. It also requires these same businesses and individuals to design and direct how capital is allocated within their communities - from the type of capital, to the evaluation criteria and terms.


To demonstrate what’s possible, Community Credit Lab and Common Future partnered with three entrepreneurship support organizations led and primarily focused on supporting entrepreneurs of color to launch three character-based lending programs. The lending programs will distribute capital based on relationship and trust to support entrepreneurs with affordable and flexible capital to help grow their businesses.


Each program was designed by their respective Lending Partner (including MORTAR) to address the unique challenges of the businesses they support. Community Credit Lab provided program design support to each Lending Partner and will be providing loan management services needed to run and evaluate each of their lending programs.


Based on the programs designed, Common Future worked to source funders and impact-first investors in their network that would provide patient and affordable capital to resource the lending programs via a pooled vehicle (see the structure below). Each Lending Partner is testing what’s possible if we center the people that face challenges to accessing affordable credit in the design of these programs.

MORTAR's Character Based Lending Program


Lending program for growing, Black-owned businesses in Ohio


Our Lending Partner, MORTAR, is a nonprofit organization with a mission to create diverse communities by enabling historically marginalized entrepreneurs to access the resources needed to start & run successful businesses.

MORTAR is piloting a Lending Program to expand its Iron Chest Fund with MORTAR Alumni and community to support growing Black owned businesses with large upfront costs that limit their ability to scale. Based on the experience of working closely with businesses, the team at MORTAR identified what type of capital would be meaningful for the businesses in their network, how businesses should be evaluated as being ready to take on this level of capital and how the loan terms should be designed to not burden the businesses. Loans provided through this program will be evaluated collectively by a network of service providers that support the business and will reach entrepreneurs looking for capital between $25K-$75K with patient terms of up to 6-years (total current loan pool is $300,000 for this lending program).

Impact Investment Structure


This lending program utilizes a blended finance investment structure that combines returnable grants with impact-first investment from accredited investors. The investment structure and resourcing of this lending program was led by our partner, Common Future, as part of their Character Based Lending $800,000 impact investment initiative.


Interested in learning more about this lending program?

contact: connect@communitycreditlab.org


Interested in learning more about MORTAR?

contact: https://wearemortar.com/staff/


Interested to learn more about Character Based Lending & Common Future's work? Check out this blog from Common Future on Character Based Lending.


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