Why we are freezing loan payments today

By Maribel Garcia and Erika Hernandez

Inclusive Action manages a low-interest micro-loan fund that has supported over 60 entrepreneurs with up to $35,000 in capital. Most of our clients are street vendors who take care of their families through their enterprises. To date, our fund has experienced a 99% repayment rate and our clients often submit more than their minimum monthly payment. We know they are good people. Hard-working entrepreneurs. The best of Los Angeles.

This morning, one of our long-time clients came in to make her monthly payment. She sells ice cream in a busy pedestrian corridor in Los Angeles. She is a gifted entrepreneur and her charisma washes over anyone she comes into contact with. Today, she was downtrodden. Her business was devastated by COVID19 this weekend and she was unsure if she was going to be able to make ends meet over the next few weeks. Unsurprisingly, she still came in to make her monthly loan payment.

We couldn’t take it. Our community needs support anywhere they can get it, and starting today we are freezing loan payments and deferring any activity for at least 30 days due to COVID19. 

We have started notifying clients about our loan payment deferral. One client told us he was not expecting our announcement and is feeling very emotional about our decision. He shared how grateful he was to know there are people who are supporting him; he said: “you are my family.” Many of our clients have expressed an immense sense of relief. Deferring our loan payment may mean having enough to put food on the table or pay their rent. This freeze can help, as well as the eviction moratorium supported by the Healthy LA coalition. Many of our clients shared their concerns about being able to pay rent this month.

Our staff and board are evaluating how it will impact our organization financially, but we are focused on how we can best support our clients during a time where their businesses are evaporating. It’s the very least we can do.

We hope that other lenders, both in the community development field and the private sector do the same. This must happen immediately.

But more than stopping the repayment of debt, we must also actively put cash in the hands of people. What we need is a citywide cash assistance program for micro-entrepreneurs like street vendors, but also low-wage workers who don’t have the privilege of staying home. Too many Angelenos are one paycheck away from being homeless. Our community needs to stay healthy, now more than ever, and there is no better way to keep people home and well than by making sure they don’t have to stress about how to buy food or pay their rent.

Now is our opportunity to show what equity means. While many efforts over the past few days are being made to support large industries, we cannot rely on a “trickle down” approach to supporting working people. We must help them directly. Deferring loan payments at no cost for micro-entrepreneurs is what we should all be doing.