For many parents, childcare defined the last two years. Working parents scrambled to afford adequate care while daycare owners struggled to stay open, and daycare workers advocated for getting the pay they deserve. La Plazita preschool in Oakland is a true Spanish-immersion preschool where kids learn or retain Spanish while preparing for kindergarten. In the years before COVID-19, La Plazita’s first location quickly became successful, and owner Krystell Guzman was eager for guidance when it came time to expand to a second location with a more direct community focus in Fruitvale. Pacific Community Ventures (PCV), the CDFI that I lead, provided advice through our Pro Bono Business Advising program, and Guzman eventually opened two more locations, employing 38 people. In the spirit of our motto, “Good Jobs, Good Business,” Guzman offers healthcare and retirement benefits to all her employees.

There are hundreds of stories like Guzman’s, and while banks often say “no,” at PCV, we try to come from a place of “yes.” In November 2021, we launched our Oakland Restorative Loan Fund as the first effort under our new strategy to decolonize capital. We allocated $2.5 million in no fee, zero-interest loans for BIPOC and AAPI-owned small business owners in specific Oakland neighborhoods. Krystell Guzman applied for an Oakland Restorative Loan Fund loan and received it this January. During a challenging 2020, in which many parents opted to keep their children home, La Plazita had closed for two months and upon reopening, only five percent of the kids returned right away. Guzman told us she intended to use her loan to stabilize her business.

Now that her preschools are filling up again, she’s using the loan “to continue growing the schools, maintaining the jobs that we have, and providing better wages to our employees.” As a working mom myself, I stand with the parents and staff who need the preschools to succeed in their community for their economic well-being, especially since the lack of affordable childcare led to a great drop of women in the workplace during the pandemic.

We built this zero-interest fund because small business owners in our community told us that’s what they needed. However, when we launched it, we heard some surprising pushback from some community investors and funders who accused us of distorting the market with this “free money.” To them, small business owners like Guzman were “acceptable losses” in an economic downturn unless they could afford “market rate” capital. We refused to accept this loss.

CDFIs like us were created out of the Civil Rights Movement with the purpose of getting capital to low-income and communities of color, and PCV was one of America’s first impact investors. Supporting Black, Indigenous, Latinx, and AAPI entrepreneurs is integral to PCV’s mission of creating a just economy and good jobs with dignity. People of color start more businesses each year than anyone else, and in 2021 communities of color saw the largest surge in new businesses in decades. Black and Latinx women especially, have become the new face of entrepreneurship in the US. Women of color account for 89 percent of the new businesses opened every day, but almost 75 percent of women of color say their biggest obstacle to growth is a lack of capital. In 2021 only 13 percent of Black business owners and 20 percent of Latinx business owners got the loans they applied for, and less than 1 percent of venture capital dollars were invested in Black founders.

Two aspects make impact investing different from traditional investing: 1) Intent – Design your investment to impact the social or environmental problem you’re looking to solve; and 2) Measurement – Make certain your investment accomplishes that goal over time. PCV embraces these principles to decolonize, democratize, and restore access to fair and affordable capital and mentorship.

In 2020 and again in 2021, we doubled the size of our Small Business Lending portfolio. We deployed over 91 percent of our capital to entrepreneurs of color and women across the state of California, with 88 percent invested in economically distressed communities. Evaluating our lending portfolio through the first year of the COVID-19 crisis clarified that we had barely 1 percent in write-offs (less than the 1.3 percent average loan loss rate of U.S. banks in 2020), further dismantling the perception of entrepreneurs of color, or low-income communities as “risky” in the financial industry. We build community by dismantling the rules and constructs long inherited in the financial industry that keep too many out, and design them by, with, and for the communities we serve.

While our Small Business Lending and Advising programs will continue to connect entrepreneurs to expertise and restorative capital, the Good Jobs Innovation Lab will establish a regular process of research and experimentation to ensure that our programs grow with and actively impact our communities’ changing needs, empowering workers alongside business owners.

For CDFIs to manifest the intentions set out by Civil Rights leaders to serve both racial and economic justice, we cannot be siloed from one another. We must work together to create lasting systemic change, impactful thought leadership, and transformative policy. Decolonizing capital works — and this is how we start.