Impact investing takes the bite out of auto loan sharks in the U.S.
Thursday, April 30, 2015
Last October, Michelle Corson sent checks to investors in her private equity fund for a “whopping” 3 percent return on their money. Some got less than $100.
The 50-year-old founder of On the Road Lending knows this is paltry by some measures, but she thinks it’s something to write home about.
Corson, a veteran of the financial and real estate world, is using the private equity model to do social good. She and a small band of investors are making car loans to impoverished people, mostly single moms, so they can buy reliable, low-mileage cars without paying loan-shark interest rates.
“The question is: If you offer people a small return, would they be willing to take some of their investment dollars and put them toward a social issue?” she says over coffee recently. “What we’ve found is, yes, people are willing to do that.”
It’s called impact investing.
“This is not charity or a handout. It’s a straight-up business transaction,” Corson says. “Some of our investors got checks for $73, which isn’t going to rock their world or change their lives. But they did get something. And they are changing the lives of others.”