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Edmond Johnson, chair of the DreamSpring Board of Directors and DreamSpring President and CEO Anne Haines meet with Angela Sham from Royale Ballet Dance Academy in Dallas, TX.
Edmond Johnson, DreamSpring board of directors chair, followed by DreamSpring President and CEO Anne Haines, meets with DreamSpring client Angela Sham of Royale Ballet Dance Academy in Dallas. DreamSpring is a nationally recognized nonprofit Community Development Financial Institution (CDFI). Through funding from the Kauffman Foundation, it is expanding access to small business credit among historically marginalized entrepreneurs in Kansas City.

Filling the funding gap: Another CDFI invests in Kansas City entrepreneurs

With support from the Kauffman Foundation, DreamSpring will expand access to small business credit among historically marginalized entrepreneurs in KC with loans from $200 to $2 million.

Written by Katey Stoetzel

To close the funding gap in Kansas City, especially for historically marginalized entrepreneurs, we need financial equity, innovation, and investors who are committed to the goal. DreamSpring, a nationally recognized nonprofit Community Development Financial Institution (CDFI), is now positioned to support thousands of business owners in our community to better meet the anticipated needs of small businesses and aspiring entrepreneurs.

Through funding from Kauffman, DreamSpring will expand access to small business credit among historically marginalized entrepreneurs in Kansas City. DreamSpring relends their funds to local entrepreneurs, creating more opportunities to lend to entrepreneurs as loans are paid back.

The model DreamSpring follows is different from traditional banking. In traditional banking, lenders rely heavily on good credit history to give out larger loans. Non-traditional methods mean lenders such as DreamSpring will use flexible credit requirements. For example, if a business owner has a low or non-existent credit score, DreamSpring will work with them to raise their credit score or find other criteria for qualification. The DreamSpring team can also connect entrepreneurs to business advisors, subject-matter experts, and entrepreneurial resources.  

Kauffman talked to Anne Haines, DreamSpring president and CEO, and Edmond Johnson, DreamSpring board chair, about what sets DreamSpring apart from other traditional lending institutions and the impact the organization will have in Kansas City.

Anne Haines, DreamSpring

Edmond Johnson, DreamSpring

What do you think is missing with traditional banking institutions and how does DreamSpring bridge that gap?

Edmond Johnson: Our whole objective is to be a conduit between a financial institution like a CDFI and our clients and taking a personal interest in their success that banks sometimes just don’t do. We fill a gap that banks otherwise are not going to pursue. Our loans start from $200 to $2 million. We provide those services that include increasing access to funding for alternative lending practices, redefining risk and bankability, and training lenders to expand their understanding of risk and expand their market potential.

How can DreamSpring provide loans as low as $200 when traditional loans often have a minimum of $25,000?

Anne Haines: One of the overall distinctions between a for-profit financial institution like a bank and DreamSpring is the mission. As a nonprofit community development organization, our mission is to break down barriers that inhibit people from being able to realize their potential. We focus on entrepreneurs and providing access to capital for entrepreneurs as our way to do that. Issuing a $200 business loan is prohibitively expensive for many entities. For us at DreamSpring, it’s also very expensive, which is one reason we rely heavily on charitable contributions to support that kind of lending.

We choose to make the $200 loans because, for many, that is the point of entry for somebody who has never had access to capital before; they have not been able to meet traditional underwriting criteria at a bank.

— Anne Haines
President & CEO, DreamSpring

We choose to make the $200 loans because, for many, that is the point of entry for somebody who has never had access to capital before; they have not been able to meet traditional underwriting criteria at a bank. We help the person develop a credit history. In the United States, credit history is really important, whether it’s at some point being able to qualify for a car loan or even being able to rent a house.

So, the $200 loans, while in straight financial terms, are costly, we choose to do them because they’re such an important tool in reaching large parts of our population across the country that otherwise have no access. We help people build their financial tools and financial acumen and their credit histories, which then become really important assets for that entrepreneur as she works to realize her business dream.

What is the immediate impact for entrepreneurs in Kansas City?

Haines: One of the impacts of this collaboration is going to be more dollars flowing into the hands of local entrepreneurs. Another is the impact on the entrepreneurs who will be receiving these loans. It is going to generate more opportunity for them to start, stabilize, or grow a business. Immediately, it will have an impact both on the revenue generation for that business, as well as job sustainability and creation in Kansas City. So many of the businesses that will receive funding as a result of this partnership are bringing creative goods and services to the community.

As part of our capital work, the Kauffman Foundation identifies innovative capital models, educates those involved, and deploys supportive grants that help create more equitable access to capital for historically marginalized. The Foundation seeks to broaden access to microloans and lending solutions, grow our partner’s capacity to deploy capital, and distribute more loans to people within low-moderate income census tracts. Learn more >

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