Bank of America is announcing a new mortgage that will allow potential home buyers with income below the area median and a credit score of at least 660 to get a mortgage with as little as a 3 percent down payment. The new loan will not require private mortgage insurance and will not be insured by the Federal Housing Administration (FHA). The bank is partnering with Self-Help Ventures Fund and Freddie Mac for this program. Bank of America wi
In part because large banks are not meeting the credit needs that neighborhood businesses have for small loans, a new breed of lenders has emerged, operating online, in a space that is virtually unregulated, with some engaging in the same kinds of predatory practices that characterized the small dollar consumer lending space a few years ago. They provide fast access to capital, but frequently the loans have very high interest rates, hidden fees, and allow the lender to take money directly from the businesses bank account, sometimes on a daily basis. As a result, business owners
While some entrepreneurs can rely on home equity or other personal assets to get their businesses off the ground or navigate through a rough spot, the housing crisis — and the resulting glut of underwater homeowners — cut off that path for many businesspeople, particularly in communities of color. That means that entrepreneurs are relying more heavily on traditional bank financing, such as business loans, credit cards and lines of credit, in order to stay afloat or expand.
On average, about two of every seven businesses in low-income, majority minority areas received small business loans—including business credit cards, lines of credit, and traditional loans of under $1 million—from large financial institutions with assets of more than $1 billion, according to the report, “Dis-Credited: Disparate Access to Credit for Businesses in the Chicago Six County Region.”
As a lending team manager for micro-lender Accion Chicago, I’ve met the people behind the statistics in the study: hard-working, entrepreneurial people who have the potential to generate jobs for their neighborhood, but struggle to find access to credit in a marketplace that favors bigger borrowers with fancier addresses.