Hurricane Ian caused flooding across Southwest Florida in fall of 2022 (Photo courtesy of Florida Fish and Wildlife / CC BY-NC-ND 2.0)
CDFIs are uniquely positioned to support underinvested communities in times of crisis because of their established relationships with vulnerable communities. After Hurricane Ian made landfall in Florida at the end of last September, SELF, or the Solar Energy Loan Fund, created two emergency loan programs to help cash-strapped families repair their homes and recover from natural disasters.
After natural disasters pass through a community, it can take months for money from FEMA or insurance to reach families. During that time, damage from things like mold can worsen and become more expensive to repair. By giving families access to non-predatory loans, SELF is allowing families to repair damage caused by a natural disaster before it worsens.
After Hurricane Ian, they created two loans to support disaster recovery: the “Repair and Rebuild” loan and the “Recover” loan. Both loans acquire 0% interest and no payments for the first 12 months.
With 72% of their loan recipients having low to moderate income, SELF gives families with bad credit or even no credit the opportunity to get approved for these loans. “We found that credit score alone was not a good indicator of who was going to default on a loan. It’s not a good indicator of credit worthiness either,” says Ann Vanek-Dasovich, chief operations officer at SELF. “Things happen. You have a divorce. There’s a death in the family. There’s a major medical illness. Those things will damage your credit score.”
Instead, they examine the ability to pay when determining who qualifies. They will directly look at a person’s entire financial picture to determine debt-to-income ratios and ultimately determine if there’s room in their budget to make recurring payments.
The loans are also unsecured, meaning that “we’re not taking anything other than a client’s signature as word that they’re going to pay this back,” says Lauri Gomez, Orlando and Orange County loan officer at SELF.
The Recover Loan is a flexible cash loan of up to $10,000 for immediate expenses after a disaster that are not larger projects, such as fixing fences, travel costs, deductibles and smaller expenses that affect quality of life but don’t fall under a contract or product.
Because storm damage is common in Florida, residents who live on the coast tend to have high deductibles.
“It doesn’t do you any good to have an insurance claim if you can’t afford your own deductible,” says Gomez, who helped one client cover his deductible totaling $4,500 so that he could repair his roof and damage from flooding. “He didn’t have $4,500 sitting in his savings account, but we saw that he had enough disposable income where he would be able to afford this monthly payment on an incremental basis rather than all at once,” Gomez says.
The Repair and Rebuild loan is a project-based loan for up to $18,000 and includes project management support. This means that the team at SELF works with families to schedule the services, manages expectations about what the scope of the project includes, and oversees the work during the installation and construction period. They also have a network of over 900 vetted, licensed and insured contractors that clients can trust to do the work.
Their network of contractors also helps them inform clients about these programs after a disaster, when lines of communication are down. “A lot of them help with relief efforts on the ground, so not only are they in those areas to begin with, but they also go into those areas when these disasters happen,” Vanek-Dasovich says.
While other banks charge contractors in their network a dealer’s fee, SELF does not charge this fee, so contractors do not need to mark up their services to compensate. They also review contractors’ quotes to ensure they are quoting the same as cash and will not pay contractors until the client is fully satisfied.
“We are helping these low- to moderate-income families finance these jobs and we are creating new jobs and more work for trustworthy, honest contractors at the same time,” says Jake Sanders, marketing director at SELF.
This story is part of our series, CDFI Futures, which explores the community development finance industry through the lenses of equity, public policy and inclusive community development. The series is generously supported by Partners for the Common Good. Sign up for PCG’s CapNexus newsletter at capnexus.org.