Non-profit Banking and The Five Cs of Credit
On Friday, the 9th of
December, Kat Taylor came to speak to our 5th
grade class. She is a former
parent at our school who co-founded One PacificCoast Bank with her husband, Tom
Steyer. It is a non-profit bank in Oakland with the goal of providing helpful fair banking services to less fortunate communities. She
spoke to us why it is important to give loans to people who would normally not
be able to get them.
She also taught us the 5 C’s of Credit (the elements a
borrower should have to receive credit)
- Capacity (the ability to pay the loan back)
- Capital (available money)
- Collateral (valuable things the bank can own until the money is paid back)
- Conditions (of the borrower and the environment the borrower lives in)
- Character (the quality of the person). Middle and high-income people are lucky because banks are kinder to them.
There is also a sixth C which she
added after the suggestion of an MCDS fifth grader a few years ago: Community (it is important to have a
supportive community)
One PacificCoast Bank treats
everyone the same, no matter their income.
By Ben Buder
It's great to know this bank exists, thanks for your post.
ReplyDeleteI appreciate that the bank's target market is people who are often overlooked as being able to qualify for a loan.
Access to credit can make all the difference between being able to start a business, or have the business idea languish indefinitely, as a just a dream that never quite comes to fruition.
Access to credit can also mean better access to classes, personal or business money coaching and other educational resources the bank has, so the person who is borrowing becomes better able to handle growing amounts of money. The increased skill of the borrower usually results in making it more likely the loan will be paid back, which means lower risk for the bank in making the loan. As the borrower's financial skills increase, so does the likelihood that they can pay back the loan, making this a winning situation for the borrower and the bank.
Access to credit and its eventual repayment also serves a larger community purpose, as it keeps people who are a part of the community in the community longer. This contributes to the social and economic stability of the local community, which is a really good thing overall.