Photo: Alex Castro, founder and owner of Life Recovery Centers
This post was written by OFN Blog guest author Mary Perkins, Director of Philanthropy, Dream Spring
There was never any doubt that 2019 would be a groundbreaking year for Albuquerque-based CDFI DreamSpring. A technological renaissance was underway. The nonprofit microlender was set to deploy a $6 million state-of-the-art, end-to-end proprietary online lending platform. Expectations were that it would not only exponentially increase DreamSpring’s ability to provide underserved entrepreneurs with equitable access to capital but that it would also have the potential to transform how the entire CDFI industry made loans.
Within months of launching, the digital enhancement accelerated DreamSpring’s ability to rapidly customize and close business loans online for the people we serve most—entrepreneurs of color, women, veterans, low- to moderate-income individuals, and even other nonprofits. From day one, DreamSpring’s investment succeeded in advancing the promise of an equally accessible American dream for existing and soon-to-be small business owners.
The technology was never intended for triage in an economic collapse. But come spring 2020, it answered that call too, rescuing and resuscitating microenterprises in a collective crisis born of COVID-19.
The online lending platform proved vital to DreamSpring’s ability to pivot on a dime from business as usual to serving entrepreneurs who suddenly found themselves in dire financial straits. Our early investment in the new software was made possible in part by an Activator grant from the Wells Fargo Diverse Community Capital program. The software allowed us to provide relief payment options and forgivable loans as an approved lender through the U.S. Small Business Administration Paycheck Protection Program (PPP); it enabled us to scale our lending at a record pace and across more states than ever before in our 26-year history—all from the safety of our homes; it facilitated our ability to reach and assist distressed businesses of color that were otherwise being left out of national relief efforts.
In the four months that the PPP operated, DreamSpring helped to preserve 11,333 jobs through 2,451 business loans either issued or secured, totaling $69 million across our service areas. This represents a 328 percent increase over the total loans issued in all of 2019 and placed DreamSpring among the top five PPP lenders in the organization’s home state of New Mexico.
The power of just a single loan during these unprecedented times is often vast beyond measure. It has been widely reported that families living in poverty, especially minorities, are disproportionately affected by COVID-19. As a result, DreamSpring client Life Recovery Centers in Colorado found itself providing comprehensive therapy and trauma recovery services to a record 475 people a week.
“If not for a PPP loan issued by DreamSpring, the centers would be shuttered,” said Alex Castro, founder and owner of Life Recovery Centers. The $38,000 in PPP funding enabled Alex to retain all four of his employees, hire additional contractors for the increased caseload, pay for a telehealth portal for online treatment (since COVID-19 has prevented in-office treatment), and become credentialed to accept all major insurance companies in addition to the company’s largest provider, Medicaid.
According to Alex, “all the anxiety, stress, and fear of the unknown and unemployment have increased for our clients … and there a lot of couples needing help because of COVID-related marital issues.” Quite simply, without the PPP and DreamSpring, “the clients would be without services.”
Though the pandemic is doing its best to expose and widen all conceivable social and economic gaps in our country, DreamSpring’s tech-enhanced efforts have, and will continue to, minimize its impact on those most fragile enterprises that make our communities a home—neighborhood flower boutiques, auto repair shops, bookstores, cafes, salons and barbershops, and artisan booths.
DreamSpring has always been committed to supporting the very small, relatable “lifestyle businesses” that even in the best of times operate with cash flows which, if interrupted, can only sustain them for a few days. Before the pandemic and with the support of the Activator grant, DreamSpring’s embrace of a digital lending community and highly optimized and inclusive lending platform allowed us to update and digitize the product these businesses sought most often—the Presto Loan.
Presto offers $1,000–$50,000 loans with flexible credit score and collateral criteria, minimal paperwork, and approval and funding within one business day. Presto Loans are a safe, affordable alternative to products from predatory lenders that target low-income borrowers, like those in the diverse communities we serve.
Digitizing the lending process has not only optimized our applications but has also enabled participation in high-volume lending marketplaces such as LendingTree. Entrepreneurs across our regions can now view DreamSpring as one of their potential options when seeking a loan, on their own schedule, and with a competitive product.
Just as technology during the pandemic has been a lifeline for all of us, providing access to safe, virtual visits with family, to remote work and education, to medical appointments, and to online shopping, technology has revolutionized DreamSpring’s capacity to serve out its mission and provide hope in the darkest of times.