Michelle Corson, a finance professional, wanted to use her skills for the social good.
“I entered my middle years and decided that I wanted to use the skills and knowledge I developed for some good purpose,” she said. “I wanted to use finance in a positive way and champion the idea of impact investing in Texas to solve certain social problems.”
When she looked around, she saw that people weren’t able to find better jobs, not get good food, or take their kids to the doctor – because they didn’t have time-efficient ways to do them. There was a lack of transportation to get there. Corson focused on helping working Americans get affordable loans to buy new cars that are fuel efficient and low in mileage. New cars are less prone to damage and are under warranty if they do occur.
Transportation is key to escaping poverty, writes Mikayla Bouchard the new York Times. For most Americans, having a car is essential to economic equality. Much of the country does not have reliable public transportation, making it difficult for some working Americans to travel on time.
Back in 2011, when Corson founded Champion Impact Capital, impact investing was an emerging sector. Champion Impact Capital is an advisory company that helps governments, investors and entrepreneurs find financial strategies that solve social issues. “It took a while for people in our community [Texas] To embrace the idea that investing doesn’t have to be either maximal return or zero profit,” Corson said. “You can do well and make a profit at the same time.”
If Corson was going to solve the transportation problem for low-income families, it needed to build an ecosystem. Established in 2013, On The Road Lending provides vehicle-selection assistance and long-term financial advice. It helps people to improve their credit. On the Road Sustainability Fund, an associate company, offers affordable loans to buy fuel-efficient, reliable cars. On-the-road lending also helps people find affordable, short warranty and fuel efficient cars.
On the road sustainability funds are Community Development Financial Institutions (CDFIs), certified by the US Department of the Treasury. They provide financial services to those in low-income communities and those who do not have access to funding. Virtually all of the more than 1,200 CDFIs provide loans for affordable housing and small businesses, and most are non-profits. Only a few offer consumer loans. On the Road Sustainability Fund is a for-profit company that provides below-market auto loans for late model, fuel-efficient vehicles for working families. For institutions and individuals who care about both the social impact and financial benefits on their investments, CDFIs are a good investment opportunity.
Over time, on-the-road companies, the umbrella entity, began to scale geographically. On the Road Companies are a family of for-profit and not-for-profit social enterprises. It is now in Texas, Mississippi, Alabama and Georgia. It will expand to Arizona, Illinois and Indiana over the next 30 days. Early next year, it will go to Ohio, Kentucky and Tennessee.
Companies on the road expanded their strategy to include other vertical integrations. A few years ago, it launched two additional units: On the Road Garage and On the Road Motors.
The garage on the street does collision repair and has a workforce training program. “We are building the workforce of the future by training vulnerable groups in the skills to fix smart car technology,” Corson said. It offers paid apprenticeships that train people on collision repair, advanced driver assistance systems and other smart car technology. These are high paying and demanding jobs. Skilled body tech workers without a four-year college degree can earn up to $150,000 a year. “We have two facilities in Dallas and we are getting ready to issue bonds to increase it to about ten more… We will be issuing BNY Mellon $109 million stability bonds.”
On The Road Motors is a Texas Car Dealership. “We are not a retail franchise like a Toyota dealer,” Corson said. It sources cars directly from auction or off-lease for on-the-road lending clients, providing a low-cost option for working families.
“Our customers have been challenged with transportation,” Corson said. “We’re not asking them to come to our office and meet us. We do all our work with people over the phone, including over the phone,” Corson said. People can also buy a car from the comfort and safety of their homes.
“The hardest part on our lending side is that predatory lenders tend to have deeper pockets than advertised,” Corson said. “And they are in low-income communities everywhere.” As mission-based lenders, CDFIs do not have the resources that are visible to payday loans, title loans, or check-cashing service companies in low-income communities. While community lenders and most banks are familiar with CDFIs, awareness among borrowers and investors is low.
Interestingly, when the media covered that CDFIs were helping small businesses disburse Payroll Protection Program (PPP) loans, to mitigate some of the economic shock of Covid-19, this financing option among consumers Increased awareness and credibility. Media coverage is an important way CDFIs build awareness and credibility as a reliable and affordable financing option.
On the Road Lending has also received a grant from Toyota Finance Service to develop a blockchain platform that will reduce the cost of the original loan. “This will enable us to onboard and underwrite applications more efficiently,” Corson said. “Using the platform will free up some money for advertising.”
“We have faced financial challenges over the years,” said Corson. “One of our nonprofits had a really tough year last year during the pandemic.” Transportation was not considered a basic need, so it was difficult to raise philanthropic dollars. The reality is that most customers of on-the-road companies are essential workers and frontline workers. They need to drive to get to their jobs.
The ultimate goal is that revenue from CDFIs will replace the need for grants. “In fact, it’s probably three or four years before we have volume levels to be self-sustainable,” Corson said.
How will you do well while making a profit?