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Transcript

Muscle Memory · Difference Makers

• 0:22
  Brian Edwards: Native CDFIs are often the first to recognize a financial need in their communities, and they're also the first to imagine a lending product that could address that need. But identifying a need is only the beginning. Before a lender can launch a new product, it has to answer some difficult
• 0:43
  questions: Is there enough demand? Can the organization staff and administer it? How should the loans be priced and underwritten? Where's the capital going to come from? And how is the lender going to manage risk while staying true to its mission? Native CDFI Network created the Forge Certificate Program to help native lenders work through those questions. Forge, which is short for Finance for Opportunity, Resilience, and Growth in Native Economies, is an eight-month program that helps native CDFIs test, refine, and prepare lending ideas for launch. In this episode of Difference Makers, we're going to hear from Pamela Boivin of NCN about why Forge was created and the institutional capacity it's designed to build. Then we're going to visit with Tiwa Lending services in New Mexico, where Executive Director Sheila Herrera is using the program to turn years of relationship-based lending into a more complete and consistent loan program for businesses. I'm Brian Edwards.
• 1:56
  questions: This is Difference Makers 3.0.
• 2:07
  questions: All right, Pamela. Good to see you. Thanks for joining us.
• 2:10
  Pamela Boivin: Hi, Brian. It's great to be here.
• 2:13
  Brian Edwards: So, let's talk about what led NCN to create the Forge program.
• 2:20
  Pamela Boivin: Forge is a different approach, something that we haven't necessarily had in our industry, and certainly something that I would have loved to have when I was leading a CDFI in Wisconsin. Forge is a program designed to leverage what we do best in our industry.
• 2:38
  Pamela Boivin: We spent a lot of time talking with different practitioners, CDFIs from the OGs, the longstanding, experienced leaders in our industry, and then some of the emerging CDFIs as well. And what we heard from those conversations is that we know our communities very well, and we understand our communities, and we understand where the gaps are. And then, hearing from borrowers and knowing the needs of our communities, we can apply that to the development of the lending products that could help make a difference within those communities. Is there enough demand for this product? Can we operationally support this? And then does the pricing work? And then what does that mean for our portfolio? But then also taking that and turning it into policies, and then how we capitalize the program, and then how do we launch it? And then the impacts to the communities, and are we addressing the demand that we came to when we first started the conversations around the loan product?
• 3:52
  Brian Edwards: I should have asked you at the start. What is Forge? What's the meaning of it?
• 3:54
  Brian Edwards: It's an acronym, right? It is
• 3:59
  Pamela Boivin: Forge stands for finance for opportunity, but then it also entails the resilience piece to it. But then it also incorporates what growth can look like, and then it's also for our native economies.
• 4:13
  Pamela Boivin: So finance for opportunity, resilience, and growth in native economies.
• 4:21
  Brian Edwards: Walk me through just a little bit how you actually how Forge actually helps these organizations really look at their community's needs and turn it into a viable lending product.
• 4:32
  Pamela Boivin: Developing a new lending product can affect much more than lending, but it also affects your it affects your staffing, your systems, your policies, your underwriting process, looking at compliance and risk, and leveraging capital that you need for your deploying of the product. It's taking all of those into consideration when you're answering the question of how can we solve this problem for these community members. And when it comes down to access to capital, which is probably one of the biggest problems within our community, this helps you take an internalized approach at identifying qualitatively and quantitatively the impacts that that you can have, but also fine tuning what you already do day in and day out as a CDFI, and putting that in a repeatable process so that it builds efficiency for your organization. So I think the Forge program gives you that that lens and that insight, so that you have this repeatable internalized process that your team is involved in, and your team internalizes it so that the turnaround of the responsiveness for these lawn products that you're developing or refining has that bigger impact on your community, and you can get to that impact quicker.
• 5:53
  Brian Edwards: I'm looking at my notes, and I've got the seven modules and power hours and the capstone. Talk to me about these these kind of concepts.
• 6:02
  Pamela Boivin: At the end, they'll have a proposal. They'll have a documented outline with details and insight to how they're generating impacts and how they anticipate the impacts to grow over time, so that they can present this to their community and their stakeholders, they can present this to potential funding partners or investors who want to have that same impact and align with the same mission that we do within our organization.
• 6:30
  Pamela Boivin: Because it's easier to get get partners aligned when you have the story to tell, and you can bring that potential investor into the story with this proposal, and we're calling it a capstone project. But really, it's the story. It's the story of the loan product, and it's the story of the impact that it's intending to to have on the community.
• 6:58
  Brian Edwards: This is not just a a one and done cohort. This is like you're building the school.
• 7:03
  Brian Edwards: You're building the platform to help the OGs or the the folks that are running CDFIs really develop new products in this kind of comprehensive, holistic, creative, but also disciplined program.
• 7:23
  Pamela Boivin: I guess I would equate it to we're building muscles for our native CDFIs, and we're building that muscle memory so that they can do it again and again. And of course, when you build muscle, you get efficient, right? You get stronger and you get better. So I guess that's probably the best way I can equate that the Forge program and our efforts through NCN is that we're helping them build that internal muscle, so they have that good muscle memory.
• 7:51
  Brian Edwards: Pamela described Forge as helping native CDFIs build muscle memory. The program's name also suggests
• 7:59
  something similar: forging a strong lending product takes repetition, discipline, and pressure testing. At Tiwa Lending Services in New Mexico, that work began with a hard look at its business lending. Tiwa was already finding creative ways to support entrepreneurs who might not qualify for conventional financing? Forge is helping Tiwa turn that experience into a stronger, more consistent program for pricing, underwriting, and managing those loans. Here's my interview with Tiwa Executive Director Sheila Herrera. Tiwa Lending Services has a long history of providing home loans, consumer loans, and financial literacy education to members of the Isleta Pueblo and other Native Americans in approved counties in New Mexico.
• 8:54
  something similar: I asked Sheila what she was working on through the Forge cohort and where the idea came from.
• 9:01
  Sheila Herrera: We decided let's go ahead and start implementing our small business program. This came about from our Native Youth Empowerment Symposium when we held our Entrepreneur to Small Business. I realized that there was a lot of students that attended the the session, and they were really interested in wanting to become a business owner. So I was like, well, you know what? We need to start educating them. So now that they're getting out of high school, let's create some type of program where we can go ahead and help empower like potential entrepreneurs and start up businesses, kind of like to test, refine, expand their ideas, and let them know that you can start a small business.
• 9:42
  Sheila Herrera: When we were listening to the students, they said, "Like I want to, I want to get a food truck. I want to start a program for drama, and start going into the TV business. I want to do comics. I want to start selling moccasins. I was like, "Wow, they know what they want." So now, the need is there for them.
• 10:00
  Sheila Herrera: So let's start educating them, and let's develop some type of product that we can come in and say how to start your small business, whatever that is. We were letting tribal council know about our different products that we had available, and how Tiwa could be more of an impact in the community. They were like, "Oh, you guys offer business loans. Our farmers are in great need, and and there's kind of where the conversation started.
• 10:33
  Brian Edwards: Tiwa was already making very small business loans, micro loans. I asked Sheila what that lending looked like, and how knowing the community helped Tiwa see opportunities a conventional lender might miss.
• 10:50
  Sheila Herrera: We had one borrower that came in, and he was a bread maker. He needed some money. A regular lender, business lender, would ask you for your profit and loss and all this documentation to give him a loan, knowing that he was from the community and that he sold bread, I knew that he was well known. We started saying we need to help this business thrive.
• 11:15
  Sheila Herrera: That's what makes CDFI so unique, is because they can be innovative and create a product that's going to work for the tribal members.
• 11:26
  Brian Edwards: That community knowledge helped Tiwa respond to individual borrowers, but expanding the program raised
• 11:32
  another question: How would it set rates consistently, keep the loans affordable, and manage its risk? Sheila says Forge brought that into focus.
• 11:44
  Sheila Herrera: What opened our eyes is that when we went through the Forge program, we started saying, "Oh, oh my goodness, we didn't create a matrix. Like, how are we going to determine when these borrowers come up to us? How are we going to determine an interest rate? Somebody else is going to come to us before we start promoting this, and we can't say, "Oh, you get an 8% you get a 9%. We we can't do that. We have to create a matrix that's not going to be credit score driven, but somehow to help us also to mitigate our risk, but to make it affordable for the business owner to continue their cash flow and to continue to make their business thrive.
• 12:27
  Brian Edwards: As we talked, it became clear that Tiwa was building more than a single loan product. It was putting the pieces of a broader business lending program together. I asked Sheila how Forge, and learning from other native CDFIs in the cohort was helping that work.
• 12:46
  Sheila Herrera: Yes, and that comes with all the technical assistance that Forge is providing. And honestly, where else would we have gotten that if we wouldn't have had this Forge? I mean, we can learn from our different peers, and we don't have to reinvent the wheel. And any one of the NATO CDIs are more than willing to help. Like we'll lend out our mortgage loan policies, and say here's what we have, and then they'll send us theirs. And even looking with this forge product has even helped me to kind of go back and re-evaluate our home loan program policies. The
• 13:24
  Brian Edwards: conversation came back to Tewa's mission: helping people build wealth in their own community through both home ownership and business ownership. I ask Sheila, what connects those efforts? The
• 13:38
  Sheila Herrera: passion and making sure that we're helping the community, and that's where the our I guess the passion and the mission come in, because you look at it as a service of helping build the wealth in the community, and so now they're able to become successful homeowners, along with the successful homeowners, then they're you're giving them the tools to to have their businesses thrive, and so that's rewarding to us because now we've educated them and maybe little things that they didn't know, like maybe these new classes that we want to start implementing, how to start your business, where should you be at? What should you know?
• 14:24
  Brian Edwards: Finally, I asked Sheila what success would look like for the entrepreneurs Tiwa serves, and for her organization that's doing the lending.
• 14:35
  Sheila Herrera: We're going to be able to say, "Wow, Tiwa Lending Services made an impact in our community, and they have helped our tribal members with their helping their business thrive. And I and I look at it from our perspective, even as Table Lending Services. You know, I have to look at our operations. I have to look at our staff. I have to look at our product. When we borrow money, are we going to be. Borrowing money at a low cost to be able to relend that, and that just goes in a higher level of a business owner.
• 15:10
  Brian Edwards: Tiwa already knew the entrepreneurs it wanted to serve. It understood their businesses, their community, and the barriers they faced. What Forge provided was a framework for turning that knowledge into a lending program that could operate consistently and grow responsibly. That may be the larger value of the Forge program: new and refined loan products, stronger internal systems, and a repeatable way to move from community need to sustainable lending. When I spoke with Pamela Boivin, I told her it sounded like NCN was building a school. Forge has grant support for a three-year pilot, but the goal is to create a lasting opportunity for Native CDFI leaders to develop products, learn from one another and build that capacity within their own teams. Pamela calls it muscle memory. For native CDFIs, the next good idea is rarely the problem. The harder work is building the capacity to make it last, being ready for the next idea that comes after it.
• 16:24
  Brian Edwards: Difference Makers 3.0 is a co-production of the Native CDFI Network and Tribal Business News. Thanks to Pete Upton and his team at the Native CDFI Network, Shawntel Hogan, Pamela Boivin, Jody Fissher, and Stephanie Prater. Of course, thanks to the Native Story Lab team, especially Kristen Lilya, a proud member of the Bois Forte Band of Chippewa. She's our project manager, wrangler in chief, and on-the-ground recording expert. Thanks also to Elyse Wilde. She's working behind the mic this season as our sound editor and podcast maven, and to RichTupica, my personal podcasting guru who edits out all my uhs and ums.
• 17:10
  Brian Edwards: Check the show notes for links and more. Thanks for listening.
• 17:15
  Brian Edwards: See you next time.