OP-ED: RESOLVING THE ACCESS-TO-CAPITAL PROBLEM
As a Latino business leader in Los Angeles, I see that equity and inclusion for underserved communities of color continues to be an issue. Communities of color—including business owners and entrepreneurs—are disproportionately denied lending products such as second mortgages or home equity lines of credit because of credit scores. These lending products are crucial tools to starting and growing businesses.
Today, what is needed are new approaches to finance that are not weighed down by past inequalities. Home ownership and the capacity to invest in, and maintain, what is traditionally a family’s most valuable asset—their home—is a critical part of wealth development for Latino communities.
In Los Angeles, the Property Assessed Clean Energy program, known as PACE, has shown great promise as an alternative finance tool. Hundreds of California cities are part of PACE, which meets this need by providing financing for vital energy and maintenance repairs and improvements.
PACE covers 100% of the costs for new heating and cooling systems, roofing, windows and doors, and other energy improvements—hundreds of such projects have been completed in the Los Angeles area and throughout the state. PACE offers rates and terms that are the same for all program participants, and this simple fact makes PACE more equitable than other financing solutions.
Companies like Renew Financial specialize in PACE and have assisted our communities through this innovative new approach to financing maintenance of the substantial investment home ownership represents. Where traditional lending institutions and mortgage banks have been historically disinclined to favor lending to our communities, the PACE program can help address the limited access-to-capital issue by providing financing to our families for critical home improvement and maintenance needs.