Developmental Loan Fund

 
gene The ELCA Developmental Loan Program helps combat the root causes of poverty, social injustice, and the exclusion from credit markets of people living in poverty. The program provides low-interest loans to underserved communities seeking self-sufficiency as they work to develop affordable housing, community-controlled businesses, micro-enterprise, and community economic systems. Loan funds are provided by ELCA World Hunger.

Loan projects must meet the following criteria*:
  • Serve low-income people, targeting people and communities most in need
  • Operate where there is limited access to conventional credit
  • Generate the greatest impact for the longest period of time
  • Provide for resident, worker, and community ownership

Criteria is based on the "Guidelines for ELCA World Hunger Program Activities."

At least 75 percent of the Developmental Loan Fund's capital consists of indirect loans invested with intermediaries, such as community development loan funds, community development credit unions, and peer lenders that share the ELCA's values and reflect the ELCA's social and economic justice concerns in policy and practice.

Investing with these types of intermediaries has the following advantages:

  • They are well-connected to the community and/or region they serve.
  • They are accountable to a board of directors that has a fiduciary responsibility.
  • They have a systematic approach to lending and a track record.
  • They have the ability to combine funds for greater leverage.
  • They are equipped to evaluate projects and provide technical assistance.
  • They are able to monitor and provide better oversight.
Procedures for direct loans
  • Borrower completes a proposal and loan application.
    • Borrower must demonstrate that the organization meets ELCA World Hunger criteria.
    • Borrower must be a corporation or 501(c)3 organization with a meaningful connection to an expression of the ELCA.
  • The director for Community Development Services processes and reviews the application.
  • If minimal criteria are met, the application is then forwarded to the Loan Committee, which consists of appointed ELCA churchwide staff.
  • The director for Community Development Services notifies the borrower of the result of their loan request.
Terms

For most loans, terms are:
  • Below-market interest or no-interest. The loan committee establishes interest rates on an individual basis.
  • Monthly interest payments with an annual reduction of principal.
  • Annual financial statements are required along with minutes from board meetings.

Most loans are unsecured. For loans secured by collateral, there will be no actual encumbrance until the borrower is deemed in default. The director for Community Development Services is required to do intense monitoring and to make site visits.

For more information, contact:

Joe Young
Director for Community Development Services
ELCA Church in Society
8765 West Higgins Road
Chicago, IL 60631

Ph: 800.638.3522 ext. 2683