For the 56 million unbanked and underbanked adults in the US, an emergency or unexpected bill can trigger a dangerous debt spiral. Often, reliance on car title lenders and payday loans with hidden fees and harsh penalties only sink individuals further into poverty. This group, which is disproportionately comprised of women and minorities, is also more likely to be excluded from economic opportunity and entrepreneurship due to low credit scores, no collateral, and little-to-no banking record.
JUST is one nonprofit working to close the racial wealth gap by investing in Spanish-speaking female entrepreneurs living on low incomes — one of the most historically unbanked and underbanked groups in Central Texas. JUST offers a platform for microlending, in which individuals issue the loans rather than banks or other credit institutions.
“With my first loan, I was able to buy more inventory to show my clients. These same people recommended me to others and that’s how my business started to grow.”Isabel, Entrepreneur
How it Helps
Twenty-one percent of Americans have no savings, leading many to grapple with health and housing insecurity — while making it virtually impossible for entrepreneurs to grow their businesses. The average JUST borrower has a family income of $38,600, which is 156% above the poverty line for a family of four.
Founded by former Whole Planet executive and Peace Corps volunteer Steve Wanta, JUST’s trust-based loans offer clients a path out of poverty and an opportunity to cultivate their businesses and savings.
The organization centers around community leaders called JUST Entrepreneur Trust Agents who act as borrowing and repayment facilitators. After completing an eight-week leadership development program, the agents (who are typically current or former borrowers themselves) can invite additional borrowers to the platform.
Each new client is required to enter the program with an equal partner. Initially, borrowers can take out a loan of up to $1,500 with a 15% interest rate and, with time, can take advantage of larger loans. But if either partner fails to repay their loan, neither will be able to access additional credit. This trust-based social underwriting fosters community interdependence and enables JUST to reach a larger base of borrowers while reducing its default risk.
Additionally, JUST’s loans accrue an interest rate of only 2.0% per year, compared to the current US Fed Prime Rate of 3.25%. This also falls far below the risk-adjusted market rate for similar unsecured loans. Unlike predatory lenders that typically charge borrowers hundreds of dollars in hidden fees and cause further financial damage, JUST has designed a system to help female entrepreneurs pull themselves out of poverty, grow their businesses, and access other wealth-building opportunities like home ownership.
By removing barriers to capital and providing access to financial coaching, JUST puts power back in the hands of local entrepreneurs. As of August 2021, the nonprofit has lent more than $6 million to more than 800 people with a repayment rate of more than 99%. The funds have unlocked countless opportunities for low-income female entrepreneurs to thrive.