By Kim Kalunian, WPRO News
Andy Posner is only 28, but his business has been up and running in Providence for four years.
Capital Good Fund is the brainchild of Posner, a Brown University graduate who matriculated to Providence from his home in Los Angeles. In 2008, just when the recession hit hardest, Posner was getting set to graduate.“All around me economic hell was breaking loose, and I saw need to find a way to address that,” he said. So Posner wrote his master’s thesis on what turned into the business plan for Capital Good Fund (CGF), which officially launched in 2009.
Today, CGF has an office in Providence that’s home to 11 employees. They plan to open a micro-branch in Woonsocket this summer, and are looking to open an office in another state (yet to be determined) next year.
On his business card, Posner says CGF specializes in “innovative microfinance.”
“Broadly speaking, we do financial services for low-income Rhode Islanders,” explained Posner.
CGF does three main things: provides loans of up to $2,000 for things like purchases or rent payments; offers one-on-one financial and health care coaching; and provides free tax preparation.
Posner said they’ve helped about 1,500 Rhode Island families so far. The need that Posner saw in 2008 is still very much real, he said, since roughly 150,000 Rhode Islanders live in poverty.
“There’s also a very, very active predatory financial industry in Rhode Island,” he said.
Faced with tough financial decisions, many of those facing financial hardships turn to payday lenders, and find themselves in even more debt than they had before. Posner said those pay day lenders change up to 250 percent interest, and “target the poor.” He testified at both the Senate and House committee hearings on a bill that aims to crack down on pay day lenders.
At CGF, Posner charges a 20 percent interest rate. While it may seem high in comparison to bank loans, CGF keeps monthly payments low.
For example, if someone borrows $2,000 from CGF, they’ll pay back $2,500 over two years. Their monthly payment would be $106 a month. CGF doesn’t have a minimum credit score requirement for loans.
So how is CGF they sustainable? First off, CGF is a non-profit, and is 80 percent funded by grants. They’re 20 percent self-sustainable, said Posner. That money comes from interest and fees.
Because their goal isn’t to turn a profit, Posner said they can be more compassionate about their clients. Every person gets financial coaching, and as long as they tell CGF they’re going to miss a payment or be late, Posner said they can work around it.
The other key to keeping CGF afloat is a bit more clandestine.
“We spent a lot of time building an algorithm for determining who is likely to pay back and who isn’t,” said Posner.
Posner’s business plan is important not only to him and his employees, but to his clients; a $2,000 loan might be the difference between being able to move out or having to stay under the same roof as a domestic abuser, he said. It’s work that has been important to Posner since his days at Brown, and continues to be today.
Despite his roots in Los Angeles, Posner said he decided to stay in Providence for several reasons.
“It really came down to being at Brown, which has a very entrepreneurial community and a lot of great connections,” he said. “And Providence is a place that’s very manageable… If I were to go to L.A., I wouldn’t know how to start, it would just be overwhelming.”
Plus, he said, there’s unparalleled access to elected officials.
“I don’t know what other state I can know the entire congressional delegation by name,” he said.
Though Posner hopes to make CGF a national company one day, he will always have a soft spot for Rhode Island.
“We’ll always be headquartered in Providence,” he said.
Learn more about The Capital Good Fund here.
