Message from the Director

As Black History Month draws to a close, one meaningful way we honor the month is by supporting black-owned businesses. But when it comes to making available the capital black-owned small businesses need to sustain and scale, financial institutions are not meeting the mark. The Federal Reserve Bank found that only 20% of Black-owned firms that sought loans, lines of credit, and cash advances were approved for the full funding amount, compared to 58% of their White counterparts. 79% of black-owned small businesses reported relying on funds from the owner’s personal savings, friends, or family, drawing down on rather than building wealth for business owners and their families. 

Access to capital is critical for small businesses to fund operations, invest in their growth, and weather financial challenges. At the Federal level, several agencies in 2022 joined together to encourage lenders to explore the use of Special Purpose Credit Programs (SPCP) to serve unmet credit needs of economically disadvantaged individuals and communities. Since that time, some banks have brought to market new financial products specifically available to BIPOC-owned small businesses. 

We are activating this opportunity locally. In partnership with the Office of Small Business and the City Administrator’s Contract Monitoring Division, we have recently launched the Treasurer’s SF Lends initiative, seeking to connect local small businesses with affordable loans and lines of credit for their day-to-day cashflow needs. Among the products included in the SF Lends initiative are two SPCP products offered by BMO and CA Bank & Trust. We hope that through broad outreach, small business technical assistance, and leaning into new SPCP products, San Francisco will be able to move the dial locally for small businesses seeking access to capital, particularly in our BIPOC communities where it is most needed. 

Best,

Nicole Agbayani
OFE Director

Fed Up with Overdraft

Did you know that more than 25% of American households faced overdraft fees last year and the average overdraft fee equates to more than 16,000% interest?  Bank On San Francisco recently launched a new marketing campaign, Fed Up with Overdraft, to raise awareness about the harms of overdraft fees and point consumers to alternatives. Local consumers are instead encouraged to consider safe and affordable Bank On certified accounts for their banking needs, which among other features, do not have overdraft fees. The campaign was launched as the CFPB announced proposed rule changes that would close a loophole exempting overdraft from consumer financial protection laws around lending. According to the CFPB, “These institutions typically charge $35 for an overdraft loan, even though the majority of consumers’ debit card overdrafts are for less than $26 and are repaid within three days.” 

Student Debt

Deadline for FFEL Borrowers - April 30, 2024

The U.S. Department of Education is updating borrower payment counts (they call it an “Account Adjustment”), which will cancel debt for many older loans and move millions of borrowers closer to loan forgiveness. To qualify, borrowers with federal student loans they took out before 2010 through the Federal Family Education Loan (FFEL) program that are owned by private companies must apply to convert those loans to the federal Direct Loan program through a simple process called “consolidation.” Borrowers with these privately held FFEL loans will miss out unless they submit their consolidation application no later than April 30, 2024. If this applies to you or someone you know, visit OFE’s student debt resource page for more detailed guidance on how to take action before this key deadline passes! 

Economic Justice Policy in California

With the start of 2024, several new economic justice-related laws have gone into effect in California. Here are some highlights:  

Minimum Wage 

Increased minimum wage: AB 1228 and SB 525 increase CA minimum wage to $16, with higher minimums for fast food workers ($20, effective April 1) and healthcare workers ($23, effective June 1). San Francisco's minimum wage is $18.07.   

Student Debt 

Transparent cost of courses: AB 607 requires California Community Colleges and California State Universities to display the estimated cost of course materials and fees for their classes. Compliance by the University of California campuses is voluntary. The law takes effect in time for the 2024-2025 school year. 

Housing 

Cap on security deposits: No more saving up three month's rent for a security deposit when moving into an apartment. This new law (AB 12) limits the amount landlords can charge for a security deposit to just one month. 

Prohibit nuisance orders for interaction with law enforcement: AB 1418 prohibits cities and counties from adopting nuisance ordinances that require or encourage penalties or even an eviction if a tenant or a family member had an interaction with law enforcement or a criminal conviction. 

Prohibit credit check for rental application:  SB 267 requires landlords to accept alternative evidence to demonstrate ability to pay, in lieu of credit history. 

Criminal Justice 

Lower markups on prison canteen items: SB 474 lowers the average markup on prison canteen items (also known as commissary) from 65% to 35%.

UPCOMING EVENT: Save the Date!

San Francisco Office of Financial Empowerment
City Hall Room 140, 1 Dr. Carlton B. Goodlett Place, San Francisco, CA 94102

Homepage | Office of Financial Empowerment (sfgov.org)