Lending Through DC SELF

The DC Solidarity Economy Loan Fund (DC SELF) provides loans to local cooperatives, democratically-run workplaces and other solidarity economy projects. DC SELF is run in partnership with Seed Commons, which supports 30+ loan funds in the US, Canada, and South America.

Over the past four years, DC SELF has lent out more than $3,000,000 to local cooperatives and solidarity economy projects. From a $10,000 loan to a local cleaning cooperative to upgrade their equipment, to a $50,000 loan to a local worker-owned landscaper to buy a new truck and hire more staff, to a $1,000,000 bridge loan so construction could begin on a new grocery store in DC’s Ward 8, DC SELF’s loans have helped make a more diverse and resilient regional solidarity economy.

About Our Lending 

The Problems with Traditional Lending

Loans through DC SELF are different than those you might get from a traditional lender, like a bank. Most traditional loans require you to provide a credit score or put up personal assets, like a house, car, or savings, in order to access a loan for a business or community project.

On the surface, these policies are designed to make sure the lender doesn’t take on too much risk if the business fails or the person taking out the loan can’t pay it back on time. But these policies also have other impacts: 

• Studies show that credit scores have inherent racial bias, which means it’s harder for people of color, especially if they’re poor and working class, to qualify for a loan
  
  
• If people don’t have enough personal money or wealth to put up as collateral, they can’t get a loan, which means poor and working class people have very few options
  
  
• If a business isn’t set up in a traditional way with only one or two owners, banks and other traditional lenders often won’t consider them for a loan at all, which means that most cooperatives have a hard time even getting qualifed for loans

Another impact of traditional lending is that most loans have automatic repayment schedules, that don’t adjust for larger environmental factors that affect businesses, like a pandemic or economic recession. Many small business owners find themselves having to make automatic loan payments immediately, regardless of how their business or the larger economy is doing.

All of these factors impact small businesses, and usually mean that poor and working class people are excluded from the capital they need in order to start or expand their businesses, or if they do access a loan, they have very little support if any unexpected expenses arise.

The solidarity economy requires different kind of lending

DC SELF takes a radically different approach to lending, compared to most banks or lenders.

Instead of asking for credit scores or for owners to guarantee a loan by signing over a personal asset like a house or vehicle, we focus on building relationships with the cooperatives and other projects that ask us for a loan. 

We believe that relationship mitigates risk. And we also believe that if we’re trying to build a solidarity economy, risk shouldn’t be concentrated on worker-owners, but shared between the lender and the business. We don’t ask people who’ve gotten loans from us to make automatic repayments. Instead, we have regular meetings with coops to check in about the overall health of the business, including making sure that workers are getting paid a living wage, before a repayment plan is set up.

Interested in getting a loan through DC SELF? Learn more about our lending or contact us.