Module 1-Radical Reciprocity response

  1. No repayments greater than profits. Borrowers are not required to make interest or principal repayments until they are able to cover operating costs, including market-rate salaries,
  2. No personal guarantees: financing agreements never use assets for security unless the asset has been purchased with the financing agreement proceeds, and
  3. No credit scores. Instead, Seed Commons uses close relationships between local loan officers and potential loan recipients to establish a borrower’s reliability.[1]

These really intrigue me and totally shift how I view investing or how to find different terminology for the expected return from the borrower. The first one I think really sets the expectations clearly. Yet, I am struggling with if the borrower cannot repay in the expected or agreed upon timeframe. Or is that part of the risk and the lender needs to know going into the proposition that the investment may not be repaid?

I do like the aspect of setting parameters as well as focusing on the lender’s mission and how the investment is supportive of the mission or fits into the mission. Our congregation is having more robust conversations regarding how our investments fit into our mission as we have most of our investments in the public arena, using our values when we engage corporations in dialogue related to shareholder proposals or resolutions requesting change.

One thought on “Module 1-Radical Reciprocity response

  1. These Seed Commons principles really inspire me. I’ve heard of agreements where the loan was repaid our of a percentage of profits rather than on a specific timeline. The Brewery Complex in Jamaica Plain in Boston launched their businesses their with rent being a percentage of profits rather than a set rate which allowed for businesses in incubation to start there and thrive. There are so many creative ways to move money in support of life sustaining work.

    I also was in a conversation about a coop fund. They had had zero defaults on their loans in the last 15 years. That was a sign to them that they were doing things wrong and should take more risks if they were truly supporting the communities their mission was targeting. Meanwhile venture capital is taking huge risks and huge losses on thousands of businesses each year that fail. Failed by the standard of the business world but so much learning, so much richness and return that cannot be captured by the capital market measures.


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