Special Purpose Credit Program Resources
The Equal Opportunity Act and Reg B detail parameters for creating Special Purpose Credit Programs (SPCPs), which allow for lenders to build programs specifically created to address the unique credit needs of certain groups, such as people of color or women, without being considered discriminatory. SPCPs are intended to promote access to credit for historically disadvantaged groups, but despite proving profitable and being authorized nearly 50 years ago, SPCPs are highly underutilized. The team at Beneficial State Foundation has compiled a beginning list of resources and created a sample SPCP in the hopes of encouraging lenders to use the example as inspiration to develop their own SPCP to address the systemic issues that create barriers to equal financing for so many in this country.
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Sample Special Purpose Credit Program
Meet Cedar Hills Community Bank: A fictitious lender that has created an SPCP that aims to increase loan approvals to Black, Latino, and Indigenous small business owners in the state of Oregon. This SPCP is an example that was created by first identifying lending gaps, then designing an intervention, designing an evaluation plan, and finally by revising to incorporate feedback from regulators. In order to share as much of the development process as possible, Cedar Hills is sharing their first draft, a marked up version (coming soon), and their final version.
Underwriting for Racial Justice Lender Guide
This guide describes the Underwriting for Racial Justice Program and directs lenders on implementing programs as part of the Lender Pilot Program initiative. It includes learnings, suggestions, checklists, and even more resources. Please see Appendix B (page 33) for guidance on the regulatory aspects of Special Purpose Credit Programs, then check out Appendix C (pages 34-39) for a template to help guide you through the development of your own SPCP.
Let's connect!
If your organization has an SPCP and you would like to share your experience, please let us know! If you are interested in talking more about how you can develop a program like this, please reach out. Contact us via email to ask a question or to be added to the list to join us at our next URJ working group meeting, where we will discuss racial justice in the finance industry.