Round 5 of the Wells Fargo Diverse Community Capital (DCC) program is now open. Wells Fargo has committed $75 million to CDFIs across the country through DCC. The program makes available $50 million in lending capital and $25 million in grant capital to be disbursed over three years.
As part of the DCC program, awardees not only gain access to capital designed to specifically boost their capacity to serve diverse small businesses, they also get to tap into the knowledge of their peers by participating in a Social Capital component. Through the Social Capital component, awardees are provided multi-faceted opportunities to learn from one another as well as develop resources for the industry. Components include: a Knowledge Network, working groups around specific topics, consulting, mentoring, and industry resources.
“We believe that the combination of debt, grant and social capital is what makes DCC unique,” said Connie Smith, Wells Fargo’s Diverse Community Capital Program Manager. “The Social Capital component is a game changer. It allows CDFIs to not just build their lending capacity but truly discover innovative ways to think outside the box to better connect to and serve diverse small businesses.”
All DCC awardees are members of the Knowledge Network, which provides two in-person networking opportunities (OFN Small Business Finance Forum and OFN Conference) as well as a virtual network to engage and share best practices. From the Knowledge Network, working groups have formed around critical areas including: underwriting, marketing and communications, and tailored products and services.
Working groups allow DCC participants to learn from and connect with those CDFIs in the Knowledge Network making successful inroads in diverse communities, and to document and share those innovations with the CDFI industry at large.
Carolina Small Business Development Fund (CSBDF) was one of the first DCC awardees in 2016, and the Social Capital component has played a key role in their business. “The social capital component is a great opportunity to build capacity in a critical area of our program. Being a part of the Knowledge Network has allowed us to develop capacity and it has been a wonderful value add. I know we wouldn’t be where we are without this component,” said Lenwood Long, President and CEO, CSBDF.
CSBDF was one of the first to step up to volunteer to share their experience in a publication focused on Underwriting best practices. Amber Banks, Vice President of Business Lending at CSBDF, shared valuable insights for her peers in the group around CSBDF’s development of an innovative equity capture loan feature designed to tackle an owner’s insufficient equity injection. “Being a part of the working group really helps to lessen the learning curve. We are all trying to be impactful and innovative in this space, so having a group to talk to and learn from has really helped form best practices. We can bounce ideas off one another and come up with solutions we never before considered,” she says.
The working group produced a best practices publication in June, Innovations in Underwriting, and presented a webinar to share their insights with other CDFIs serving small businesses. Amber says “the group has taken a very unique approach, to really look beyond the 5 Cs of credit in order to look at other factors that can predict repayment.”
“Learning from our peers we have been able to build capacity around underwriting that has put our business lending ahead two to three years of what it was,” said Lenwood.
Amber sees the equity capture product as a valuable way for their CDFI to “create a consistent credit culture and serve borrowers who don’t fit into even a flexible credit box.”
CSBDF is also serving as a mentor to a CDFI who was previously deferred during a DCC application round. In this capacity, CDFIs gain “an opportunity to have a much more intimate conversation about their challenges. It adds a different level of value to the interaction,” says Amber.
Submit your interest form now to be considered for Round 5 of the Diverse Community Capital Program. Submissions must be received no later than midnight (Pacific Time) November 21.