Beneficial State Foundation Perspectives

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New Lender Pilot Program to Address Racial Discrimination in Underwriting


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Paulina Campos
(650) 455-9928

New Lender Pilot Program to Address Racial Discrimination in Underwriting 

Beneficial State Foundation, the majority equity owner of Beneficial State Bank, announced the participating financial institutions in its Underwriting for Racial Justice Lender Pilot Program today in an event with New York Times finance reporter Emily Flitter. The Lender Pilot Program supports banks and community-based lenders interested in adopting anti-racist underwriting approaches to increase capital access to people of color.


June 28, 2023, Oakland, Calif. – Today, Beneficial State Foundation launched its Underwriting for Racial Justice Lender Pilot Program, a two-year endeavor composed of 20 diverse lenders focused on dismantling racially-inequitable underwriting practices in the financial industry and increasing capital access and wealth for people of color.

The U.S.’s history of systemic racism has shut people of color out of the financial system, which results in fewer home, business, and personal loans—hampering their ability to build long-term wealth and financial stability. To address this, Beneficial State Foundation is working to reform lending’s most consequential step–underwriting (the standards set by lenders to assess the risk of approving loans). Traditionally, underwriters look unfavorably on factors like smaller down payments and higher debt-to-income ratios, which are more prevalent among nonwhite borrowers due to longstanding systemic racism. 

“There are fairer methods to determine an applicant’s likelihood and ability to repay their loans,” said Erin Kilmer Neel, Executive Director of Beneficial State Foundation. “Our Lender Pilot Program will help lenders develop more equitable underwriting approaches, like evaluating credit histories instead of using hard credit score cutoffs. The result is high-performing and more racially diverse portfolios.”

The banks and lenders selected have already demonstrated their commitment by actively implementing changes to help people of color access greater wealth. Some lenders have diminished the significance of credit scores in loan evaluations to improve the chances of loan approval for people with lower credit scores. Others have established programs designed to increase lending opportunities for marginalized communities.

Beneficial State Foundation’s Lender Pilot Program gives participating lenders the tools, templates, and technology they need to implement new underwriting approaches designed to increase access to fair loans for people of color. Lenders will then share their experiences and results to help learn from each other in peer-group spaces. 

Beneficial State Foundation will evaluate loan performances and impacts on borrowers, communities, lending institutions, and the financial industry. The Foundation will then share what it learned across the industry to spark change nationwide and offer policy or regulatory recommendations to foster more equitable practices. 

The Foundation sought to include a diversity of lender types, loan types, and geographies in its program selection process and also considered commitment levels to the cause. The organizations selected are:

  • Beneficial State Bank
  • Berkshire Bank
  • BetterFi
  • Chehalis Tribal Loan Fund
  • Eastern Bank
  • Enterprise Community Loan Fund
  • Leech Lake Financial Services
  • LISC
  • Montecito Bank & Trust
  • New Orleans Firemen’s Federal Credit Union
  • REDF Impact Investing Fund
  • Rivermark Community Credit Union
  • Texas National Bank
  • Twin Cities Habitat for Humanity Lending Inc
  • Urban Redevelopment Authority of Pittsburgh / Invest PGH
  • Vermont Community Loan Fund
  • Working Solutions CDFI
  • Washington Area Community Investment Fund
  • Washington State Employees Credit Union

“We were fortunate to receive applications from nearly 40 stellar institutions, each of which demonstrated remarkable qualities that truly resonated with our mission,” said Kilmer Neel. “While we wish we had the capacity to welcome every one of these applicants, every applicant not accepted will still have exclusive access to program guides, templates, and other crucial resources. The number of applications underscores the overwhelming commitment and drive that exists within our industry.” 


About Beneficial State Foundation

Beneficial State Foundation is a 501(c)3 nonprofit that works to advance financial justice and impactful systemic change in our communities and in the banking system. The Foundation is the founding investor of Beneficial State Bank, a triple-bottom-line certified Community Development Financial Institution.