Developmental Loan Fund

The ELCA Developmental Loan Program was created to help combat the root causes of poverty, social injustice, and the exclusion of the poor from credit markets. The program provides low-interest loans to underserved communities seeking self-sufficiency to develop affordable housing, community-controlled businesses, micro-enterprise, and community economic development.  The source of loan funds is the ELCA World Hunger and Disaster Appeal.


Loans are directed to projects that meet ELCA World Hunger criteria:

  • serving low-income people, targeting the neediest persons and communities
  • where there is limited access to conventional credit
  • enerating the greatest impact for the longest period of time
  • providing for resident, worker, and community ownership.


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 better equipped to evaluate projects and provide technical assistance;
  • they are able to monitor and provide better oversight.


Procedures for direct loans

  • Complete a proposal and loan application.
  • The borrower must demonstrate that the organization meets ELCA World Hunger criteria.
  • Borrowers must be agencies or programs with a meaningful connection to an expression of the ELCA.
  • The director for Community Development Services will process and review the application.
  • The application is then forwarded to the Loan Committee, which consists of appointed ELCA churchwide staff.
  • For loan applications exceeding $100,000, the ELCA Treasurer will make the final approval.
  • The borrower is notified 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
800/638-3522 ext. 2683