Self-Help is a financing partner with Reverend Richard Joyner, director of the Conetoe Family Life Center in rural eastern North Carolina. The Center's mission is to improve the health of local youth and the community by increasing access to healthy foods, increasing physical activities and providing access to health services. 

Self-Help’s Healthy & Equitable Foods Systems Capital Initiative aims to increase capital access for entrepreneurs of color operating healthy food enterprises. The initiative is implemented through food system lending, coalition building, convenings and policy research with the purpose of driving more capital into the hands of entrepreneurs seeking to improve community-based social, health and wealth outcomes.

This initiative was launched in 2018 thanks to the generous support of the W.K. Kellogg Foundation with additional support from the Kresge Foundation. In this post, Dr. Karen T. Jackson, external evaluator of the initiative and owner of Katalyst Innovative Consulting Services, and Emily Sloss, Self-Help’s Food System Program Associate, provide an update on the initiative’s progress after three years and vision of where we’re headed in the next three.

Barriers to Capital Access for Entrepreneurs of Color

Black, Indigenous, Latinx and other farmers of color are skilled agriculturalists and business operators that have made exceptional contributions to the American food system. These contributions have dramatically influenced the foods we eat, the crops we grow, and the farming practices we use to produce those crops. A few of these important contributions include regenerative farming practices like crop rotation and composting, the community-supported agriculture (CSA) model, farming cooperatives and refrigerated transportation systems. However, seemingly at every turn, U.S. policy and practices have created systemic barriers to economic prosperity for BIPOC farmers and food entrepreneurs.

Racial economic inequality in the U.S. is demonstrated by the fact that in 2016 white Americans had a median net worth of $171k while median worth for Black Americans was only $17k. This gap has obvious implications for myriad factors that affect quality of life and opportunities to pursue prosperity. According to the Census Bureau_­, $30k is the capital starting point to launch a new business, which leaves African Americans at a significant disadvantage, especially from the common funding path of accessing capital through friends and family. Even if a business has been operational for years, its cash reserves, collateral, and traditional creditworthiness still may not be considered adequate to qualify for financing. Research shows that minority-led small businesses need approximately quadruple the amount of time and money a white-led business needs to be loan-ready.

Wealth-building through entrepreneurship is a key strategy to address racial inequities and is a goal of Self-Help’s work in supporting healthy food entrepreneurs of color. The results of this initiative thus far have demonstrated that increasing access to capital, promoting loan readiness, expanding access to healthy food in low-income communities, and broadly promoting food entrepreneurship requires a multi-faceted approach. Lenders, businesses, policymakers, advocates, community organizations and philanthropic organizations must collectively work together, because individually they will never be able to make any significant progress in reducing racial economic inequality.

Food System Connections

In March 2021, the Biden administration announced plans to deploy $5 billion in economic debt relief to Black farmers. In response, the American Bankers Association, the Independent Community Bankers of America and National Rural Lenders Association complained that paying the loans early would cost their members and that their members should be compensated. In a letter to Agriculture Secretary Tom Vilsack, they threatened that, “If USDA does not compensate lenders for such disruptions or avoid sudden loan payoffs, the likely result will be less access to credit for those seeking USDA guaranteed loans in the future, including USDA farmers/ranchers.” 

This stance underlines the capital challenges this initiative seeks to address. The current lending landscape creates an environment where too often lending institutions put the burden solely on the borrower to have the resources for financial success without reflecting on the institution’s own contributions to denying access to capital to generations of Black farmers and entrepreneurs of color. Redesigning lending policy and shifting lending culture to reduce barriers to capital is a key piece to increasing the ultimate health of our food system.  

Key Strategies

Two key strategies of the Healthy & Equitable Food Systems Capital Initiative have been: engaging with a national network of lenders and organizations committed to improving capital access for underserved food entrepreneurs by building lending and economic development synergies that strengthen sustainable food systems; and leveraging our healthy food system lending experience and organizational connections to create partnerships and drive public policies that can increase capital delivery to the innovative business owners in need of capital.

Several additional strategies have also emerged that can be replicated by other lending institutions committed to supporting wealth building through entrepreneurship.

• Work together with other lenders and partners to build multi-faceted approaches to addressing capital access, such as building referral networks and TA provider networks.Look inward and explore internal lending culture and risk tolerance and reframe success metrics accordingly.

• Make the underwriting process more transparent.

• Expand loan products and range of loan sizes, including small loans, to better meet diverse needs of borrowers.

• Ensure loan officers and other key personnel are trained in cultural sensitivity and racial equity.

• Develop strategies to provide ongoing technical assistance. Several of our food sector borrowers of color have highlighted the importance of developing a trusting relationship between entrepreneurs and lenders that allows for technical assistance that continues over time, particularly around key financial strategies and options to consider as new challenges arise.     

• Understand and seek to affect federal policy and its impact on the food system and on access to capital.

Looking Ahead

As we continue our Healthy & Equitable Foods Systems Capital Initiative, we are building on this foundational work while also responding to the unique challenges and opportunities presented by the COVID-19 recovery process. The COVID crisis has magnified the many holes in our food system and presents an opportunity to learn from what has worked, what hasn’t, and what lending and public policy changes can drive a more equitable food system both in “normal times” and in times of crisis.

We continue to research and identify agriculture lending abuses, particularly via government programs, in order to drive meaningful reform that expands opportunity for those historically denied access to capital, too often due to discrimination. We are developing a Farm Credit System grant program framework in anticipation of the next Farm Bill. Specifically, we are exploring how such a grant program can support socially disadvantaged farmers and ranchers and entities working to increase access to healthy foods for disadvantaged families and communities. (To learn more, read Self-Help's  OCM member profile here. This is also discussed in Self-Help's policy paper, "The Climate Imperative and Community Finance," starting on page 16.) We are also exploring opportunities to support farmland access for BIPOC farmers through the Good Ground Initiative with the Triangle Land Conservancy.

Coalition and network-building also continue to play a critical role in our food system work. In partnership with Reinvestment Fund, we are helping launch the Food Lender Network, a national network of CDFIs and mission-drive lenders coming together as a community of practice to support healthy and equitable food sector lenders. On the state level, we recently helped launch the NC Food System Advocacy Coalition, which promotes just and resilient systems by developing and advocating for equitable policies that strengthen local agriculture and food systems in North Carolina. This diverse group of local food leaders originally organized around COVID response and continues to build a strong state-wide coalition to advocate for long-term recovery.

Providing financial services remains central to our mission. Through the 2020-2021 Paycheck Protection Program (PPP), we were able to provide over $18 million in loans to food system businesses across the country, including the Conetoe Family Life Center in North Carolina. The PPP program also has provided the opportunity to analyze loan data that will better inform future small business lending. As Self-Help's national footprint continues to grow, we are looking to our branch networks for ways to further embed food systems into our work across geographies. Located in the important agricultural region of Yakima Valley, Washington, Lower Valley Credit Union is the most recent addition to the Self-Help family and grows our number of credit unions with fundamental farmworker membership.  

The need for a dramatically more equitable and healthier food system has never been more apparent or had more support. It is incumbent on CDFIs like Self-Help to continue stepping up to the plate to help develop more capital solutions through our lending, policy development and knowledge sharing and network development. Nothing less than the health of the nation depends on it.