Case Study

In March of 2023, Eastern Bank (Boston, MA, $21.1 billion in assets) launched its Equity Alliance for Business (EAB) Program to create additional opportunities for small business owners of color, women, and marginalized groups and their intersectionalities (LGBTQIA+, veterans or individuals with disabilities) who traditionally have had limited access to capital. The EAB program has several pillars to support these business owners by offering one-on-one, locally based, relationship managers who are grounded in the communities they represent. A key pillar of the EAB program is credit solutions, with a Special Purpose Credit Program designed to meet the needs of women and/or people of color business owners who may not qualify for access to capital under traditional underwriting standards.

While Eastern has been the top Small Business Administration lender in Massachusetts for the past 15 years, Eastern believed there was an opportunity to do more to counteract the systemic inequities that women and people of color have faced for generations. Eastern’s team conducted both qualitative and quantitative research to better understand these inequities. A dedicated team of Eastern Bankers including members of business banking, compliance, credit risk, marketing and executive leadership participated in the creation of the program.

Ultimately, Eastern’s research showed that loan declination rates in the marketplace were higher for Asian, Latino/a/e, and Black-owned business owners due to reasons associated with what would traditionally be considered a low or “invisible” credit score. The Eastern team determined that adjusting how credit scores are used in traditional underwriting standards and considering other credit-related metrics could help level the playing field while appropriately managing credit risk. Thus, the EAB Special Purpose Credit Program was developed.

Two loan levels are available for the EAB Loan Program for businesses with 51% or greater ownership by people who self-identify as women and/or people of color: loans up to $100K and loans between $100K and $250K, both with 5-year terms and fixed rates. For loans between $100K and $250K, Eastern lowered its minimum credit score. For loans up to $100K, Eastern effectively eliminated its credit score requirement for customers who receive a recommendation from a vetted community collaboration organization and complete the organization’s credit readiness program. 

Eastern’s EAB team has developed a trusted network of external organizations who are experts in educating and empowering low- and moderate-income, majority-minority, or historically underserved business owners to assist them in becoming credit ready. Eastern works with two types of external partners that provide specific support to address customers’ needs: 1) Resource partners who provide assistance with projections, small business counseling and expertise in a specific area to customers referred by EAB and 2) Community organizations who provide more extensive technical assistance to customers around starting a business, who then refer customers to the EAB program. A grassroots marketing approach supported the launch and now, the ongoing awareness of EAB.

Since its inception, the EAB Special Purpose Credit Program has assisted women and entrepreneurs of color in the cosmetology, custodial, and construction industries. Eastern has received over 40 referrals from and has sent over 70 referrals to its community partners. Eastern has prided itself over its 200+ year history of doing “good” in its community and for its customers. The development of a Special Purpose Credit Program is well aligned with its goals, mission, and values.