Sherlie Martinez had just given birth to her daughter, but the single mother was struggling to keep up with her bills and was racking up credit card debt.
That’s when she was on the bus going to her courthouse internship and saw an ad offering financial coaching through an organization called The Capital Good Fund.
“I was feeling overwhelmed,” said Martinez, 30, of Providence. “To me, it was important to get my life in order. I had this little human I had to take care of. I got connected with … a financial coach. That’s how it all started.”
Rhode Island-based Capital Good Fund, a nonprofit alternative to predatory payday loans, was able to help Martinez repair her poor credit score. The fund was having her pay $5 a month for counseling and reporting those payments to credit bureaus, while also providing her valuable advice about negotiating with creditors about repayment plans.
But that was only the beginning for Martinez, who later in 2013 received a $300 emergency loan from the organization to fix a broken windshield on her car. And then in 2015, she received a $12,000 loan from Capital Good Fund to help her buy a car through a now-discontinued car loan program.
Martinez says she and her 13-year-old daughter, Akemi, now look back fondly at their family’s Capital Good Fund success story.
“That’s so special to me that she has been a witness to it,” Martinez said. “We have pictures of us together when we got the car, standing by the car. She’s really proud of that.”
Capital Good Fund, a microlender that is marking its 15th year, recently surpassed 14,000 loans, totaling $40 million, that have been financed through the organization, with a 95% repayment rate since it was founded on Feb. 10, 2009. The nonprofit serves low- and moderate-income families, offering them interest rates that in 2023 averaged 8.15%, so its clients can avoid the pitfalls of predatory lenders such as payday loan providers that have interest rates ranging from 250% to 450%.
Capital Good Fund got its start in Rhode Island and remains headquartered in Providence but now has 45 employees in seven states.
The organization has continued to grow despite the difficulties caused by the COVID-19 pandemic, inflation peaking at 9.1% in June 2022 and interest rates that had steadily climbed in 2022 and 2023.
Andrew Posner, founder and CEO of The Capital Good Fund, says the organization is expanding amid economic challenges, forging ahead with new programs aimed at expanding access to green energy, including its solar leasing program called BRIGHT – Building, Renewables, Investing in Green, Healthy, Thriving Communities – and a national immigration lending program in partnership with the American Immigration Lawyers Association.
But Posner said economic inflation, “which of course has moderated and cooled,” has led to two hurdles for Capital Good Fund: applicants in more dire economic straits and higher costs of borrowing.
“It has sort of degraded the quality of applicants we’ve received,” Posner said. “We have people in slightly worse financial positions. It’s straining life budgets. It’s damaged credits and overdrafts and so forth. Our approval rate has gone down a little bit. We were approving about 48% of applicants and now it’s about 41%. … We’d like to reach more folks. But if people aren’t in a position for a loan, it doesn’t make sense for us to offer it.”
While borrowing rates have gone up, Posner says The Capital Good Fund isn’t willing to balloon the interest rates that it offers to low- and moderate-income clients.
“We can’t suddenly raise our rates,” Posner said. “We just can’t do that as an equitable lender. So, we’re borrowing at slightly higher rates. What it means is that it takes us a lot longer to find a lender to us that’s willing to make a loan at a below-market rate. There are people out there willing to lend at lower rates because of our mission and impact, but it takes longer to find them and close those deals.”
Posner said “the most dynamic” part of what Capital Good Fund is doing now is in the field of clean energy.
The pilot program for BRIGHT is ongoing in Georgia but will soon be offered in other states, he says, especially given the potential for subgrants issued by state governments through the federal Inflation Reduction Act.
“The leasing program we are piloting in Georgia, and soon to be expanding to more states, is very exciting. … Pennsylvania and Rhode Island are definitely on the list,” Posner said.
While Capital Good Fund is an alternative to predatory loans, payday lenders remain in part because of insufficient government regulation, Posner says, allowing unscrupulous companies to charge 300% interest and profit when poor clients inevitably default.
For people such as Martinez, however, the lower-interest loans offered by Capital Good Fund were an escape.
“I’ve come a long way since I met [with the financial coach] in that little room,” she said. “I know that even if I had a question, I can reach out to [Posner] because I have his cellphone [number]. I’m more mindful of finances and credit now, and I can pass that on to my daughter.”
