As business students at Bainbridge Graduate Institute (now Pinchot), neither of Community Sourced Capital's co-founders had formal finance experience. But through their graduate research, they realized that something was missing: There was no good way for cash-strapped businesses to finance small-scale improvements that would grow their enterprises and add value to their community.
The 2008 recession and the subprime lending fiasco had created more oversight for banks — but also more paperwork, making it harder and harder for banks to rationalize lending small amounts to small businesses. "The trend in small business finance was that banks needed larger and larger loans in order to make sense," explains co-founder and COO Casey Dilloway. "Back in the day, maybe you could get a $20,000 loan from your banker. Now, that looks like $200,000."
“The whole financial system was driving the creation of money, but not value,” co-founder and CEO Rachel Maxwell says.
So Maxwell, 55, and Dilloway, 28, did something slightly revolutionary. They created their own financial system — a platform that helps businesses leverage their own communities to provide zero interest loans, financed in $50 chunks known as Squares.
