How Capital Good Fund is Responding to COVID-19

Written By: Capital Good Fund Leadership Team

These are difficult times. The COVID-19 crisis has sickened millions around the world, taken the lives of tens of thousands of Americans, and caused Great Depression-era levels of economic suffering (20 million jobs lost already). At Capital Good Fund, we are fortunate to be in a position to help, first because, as an online lender, our operations are minimally impacted by working from home, and second because we have the flexibility to work with existing clients and create new products to meet the needs of the community. I want to highlight three specific action steps we’ve taken to continue to fulfill our mission in this most difficult of times (all data is as of Close of Business Wednesday, April 15):

1. We are offering all of our existing 1,850+ borrowers a no-questions-asked, three-month deferment period (meaning, no payments of interest or principal). Obviously, as people, through no fault of their own, experience a reduction in or elimation of their income, their ability to make monthly loan payments will be impacted. As a community lender, we are proud to be able to work with our clients. So far, we have deferred 157 loans for a total of $530,000 in principal–fully 10% of all outstanding principal. This is a testament to the strong relationships we maintain with our customers–they reach out to talk to us about what’s going on in their lives, rather than walk away.
2. Within two weeks of the start of stay-at-home orders, we rolled out the Crisis Relief Loan (www.GoodFund.us/COVID). While the product shares some of the same features of our existing Emergency Loan–no application, closing, or prepayment penalty; unsecured; payments reported to the credit bureaus–we made important modifications. First, we increased the maximum loan amount relative to the Emergency Loan from $500 – $1,500: Crisis Loans range from $300 – $1,500. We also lowered the APR from 10% to 5%. But most importantly, the product has a built-in three-month deferment period, followed by twelve monthly payments. Lastly, we are reviewing applications based on pre-crisis income, anchored at February. In other words, we want to know whether an applicant could afford the loan before COVID-19, since by definition, they are coming to us because their income has been reduced or eliminated. We have already financed 70 Crisis Loans and have over 50 pending closing. Moreover, we have raised roughly $300,000 to support a loan-loss reserve, thanks to which we can take slightly more risk, since grants can be used to cover losses if they are higher than expected. Those interested in supporting the program can donate at www.capitalgoodfund.org/Donate or invest in the loan fund by reaching out to me at andy@capitalgoodfund.org.
3. On the Financial Coaching side, we have rolled out a “crash course” program that focuses on short-term needs and planning: how to navigate the various federal, state, and local relief programs, avoid predatory debt, and so on. In addition, we have created a Financial Coaching crisis hotline through which we are connecting families to various resources such as food banks, cash assistance, and help with applying for unemployment insurance.

Now more than ever, the need for safe and affordable financial services–banking products, loans, insurance–is clear. And as COVID-19 starts to relax its grip on our health and finances, we can’t afford to return to the status quo; rather, we must fully fund the work of community lenders such as us through a combination of grants and loan capital (debt to support our loan funds). This way, not only will we be even better prepared to serve families in the next crisis, but more importantly, we will enable families themselves to have the financial stability needed to move up the economic ladder and, in turn, better weather personal and macro-economic vicissitudes.