DreamSpring Becomes First CDFI to use R3 Score for Small Business Loan

For people with a criminal record, securing traditional employment opportunities can be a significant challenge. Even entry-level positions that don’t require a bevy of credentials can be out of reach due to the impact of having a criminal record. This means many are turning to entrepreneurship to secure economic stability and opportunity in their lives.

Based on the experience my mom and I have endured pursuing our entrepreneurial ventures after she served her sentence, I know the barrier to success has little to do with individuals themselves.

Some of the brightest people I’ve met in my life have a story to share about their brushes with the law, and there are countless businesses housed within the minds of incarcerated individuals right now that could thrive in the market if given the chance.

But it’s not for lack of will, intelligence, or business savvy that these enterprises struggle to materialize. Rather, it’s the lack of access to vital startup capital that ensures the next great business idea is unable to get off the ground.

Don’t get me wrong, securing a small business loan or any sort of startup capital is difficult enough as is. Even if you don’t have a criminal record or anything remotely like one the standards for qualifying for funding are quite high. After all, for every one successful business you see, dozens of others failed for any number of reasons - lenders understand the risk of these loans extremely well.

Yet when you combine these strict standards with the bias against those with a criminal record, it’s nearly impossible for these entrepreneurs to secure any sort of startup capital.

These challenges are only being exacerbated by the COVID-19 pandemic, which has left nearly every industry worse off for the years ahead. And despite early hopes from business owners that the Payroll Protection Program (PPP) would be an effective lifeline the reality is that the distribution of funds mirrored the biases we already see in funding between different entrepreneur demographics.

Even during the worst economic downturn of the 21st century, entrepreneurs with criminal histories - particularly entrepreneurs of color - are still forced to compete on an uneven playing field. Change isn’t inevitable - it’s something we have to force if we want to fix this inequity and hold America accountable to its promise of being the “land of opportunity.”

A New Day Has Begun!

That’s why we’re so proud of our recent partnership with the Association for Enterprise Opportunity (AEO), an organization committed to helping entrepreneurs access the startup capital they need to make their ventures thrive.

In partnering with AEO, R3 Score can work with Community Development Financial Institutions (CDFIs) more than ever before - helping these vital financial institutions support entrepreneurs who have been locked out of traditional financial services and capital opportunities in years past.

Historically, CDFIs have played an important role in providing financial products and services to lower-income and minority borrowers.everal years ago in Las Vegas, John Pinnington found himself in search of a printer who could print his items the very next day. Unable to find a printer who could do so, John was inspired to open AA Printing Service to fulfill next-day business needs. Since 2011, AA Printing has provided this niche service and supported hundreds of fellow small businesses. John learned about DreamSpring at an Urban Chamber of Commerce meeting and immediately sought a new business loan. DreamSpring helped John refinance and consolidate his other loans, building his credit so he could access efficient capital. He truly sees DreamSpring as a partner to his success.

Most recently these non-profit and community-focused banks were critical to ensuring PPP loans were distributed to local businesses in need. However, many entrepreneurs that come from communities ignored - or discriminated against - by traditional banking and who can benefit from CDFIs either don’t have the knowledge of or access to these vital financial institutions.

This is why we feel so strongly about our work with AEO and its support for CDFIs around America.

In particular, one such CDFI we want to shine a light on is DreamSpring. As an organization, their values and mission of “funding business dreams, vitalizing communities” are in total alignment with what R3 Score and AEO are working towards.

So it’s not surprising that through our new partnership with AEO they were the first CDFI to close a loan using R3 Score - providing a local small business with a $50,000 loan.

We are grateful for the enthusiastic and steadfast leadership of DreamSpring and want to give a special shoutout to DreamSpring Community Lending Officer Michael Langley for his partnership in making this loan happen.

This loan would not have happened without Michael’s collaboration, especially his commitment to understanding the data we were interpreting and how R3 Score’s analysis could help DreamSpring make this sort of loan happen.

After much discussion, we were thrilled that Michael decided to move forward with the loan using R3 Score - providing a hardworking entrepreneur with much-needed startup capital despite their criminal record shutting them out from more traditional financial institutions.

This is Just the Beginning... The Future is Bright!

We hope that this loan can serve as an example of how other CDFIs - and even more traditional institutions - can create a world of opportunity for entrepreneurs with criminal records.

For too long, Americans with criminal records have been unfairly discriminated against despite our nation’s embrace of opportunity and second chances.

And this isn’t a small community we’re talking about; more than 70 million Americans currently have a criminal record of some sort, and by 2030 there will likely be more than 100 million in this category - nearly a third of all Americans!

In the years ahead all Americans, including those entrepreneurs with a criminal history, need to have equitable access to financial services - including critical business loans like the one DreamSpring has provided.

It’s our firm belief that this needs to be a societal priority if we’re to create a better society in the years ahead, and we’re fortunate to play a role alongside partners like AEO and DreamSpring.

With R3 Score, lenders of all types can better understand and assess applicants with a criminal past - surfacing qualified candidates that these institutions overlook now with traditional background checks and risk-assessment models.

The work we’ve accomplished with AEO and DreamSpring to-date gives us hope for 2021, and be sure to stay tuned here for more developments in the months ahead.

Stay tuned.

Laurin N. Leonard
R3Score Co-Founder and CEO

Please see the Yahoo Finance article "CDFI DreamSpring Uses Global’s Subsidiary, R3 Score, to Underwrite Loans for Entrepreneurs" published Tuesday, January 12th, 2021

About the Author:
Laurin Leonard
Laurin Leonard

Chief Executive Officer

Laurin is R3 Score's CEO. R3 Score is a...

Laurin is R3 Score's CEO. R3 Score is a software-as-a-service (SaaS) business solution tailored for the 1-in-3 Americans living with a...