The case of Calvin Holmes and the Chicago Community Loan Fund

Calvin Holmes has commuted to work by bicycle since the late 1980s, when he was an undergraduate African American Studies major at Northwestern University in Chicago. Under non-pandemic conditions, after a long day at the office full of meetings with city officials, investors and clients, he rides out about a mile to the Lake Michigan waterfront. Turning left would take Holmes toward the wealthier, predominantly white, North Side of Chicago. But Holmes turns right, toward the side of Chicago more often portrayed in headlines as the realm of drugs and violent crime.

“I ride past people smiling, some people playing drums, other people on skateboards, other people walking to and from the beach, joggers, people playing basketball, playing soccer,” Holmes says. “At the 31st Street Beach in the summers, a couple times a month there’s a house music series. A bunch of people my age trying to be hip and cool. It’s just beautiful.”

Holmes doesn’t ignore the challenges of the South Side of Chicago. They are a big part of why, 25 years ago, he came to work at Chicago Community Loan Fund (CCLF), where he still works today. CCLF is a nonprofit lender serving primarily disinvested communities around the Chicago area. It’s one of around 1,200 loan funds, banks, credit unions and venture funds around the country that carry federal certification as a community development financial institution, or CDFI, meaning it’s required to make at least 60 percent of its loans to borrowers in low- and moderate-income census tracts.

Black communities are worthy of investment

Since his first day at CCLF on April 1, 1995, Holmes has seen the organization grow from three staff members and a few hundred thousand dollars in its loan portfolio, to more than 20 staff and a loan portfolio of more than $70 million. Nearly 500 loans have been made since its inception in 1991 — totalling around $230 million — supporting everything from affordable single-family housing to apartment buildings, cooperatives, revitalizing commercial properties, community facilities, and more. Holmes became CEO in 1998.

From a certain perspective, it may not seem like these loans have “moved the needle” on racial inequality in Chicago. The predominantly Black South Side and West Side of the city still have higher unemployment rates, higher crime rates, and higher rates of heart disease and diabetes compared to the wealthier, whiter North Side. The COVID-19 pandemic has also disproportionately affected Black Chicagoans — 30 percent of the city is Black, but 70 percent of Chicagoans who have died due to the coronavirus are Black.

But Holmes is playing the long game. He’s thinking about the three or four generations it took to get Black Chicago to where it is today. Black Chicago has seen better days before, and maybe within less time — say one or two generations — it can see them again. That’s not just Holmes’ vision, that’s the vision of every borrower from the South Side or West Side that comes to CCLF. It’s Holmes’ job to make sure the organization continues growing in its capacity to say yes to whatever little piece of that vision those borrowers might want to contribute. 

If the loan fund has proven anything, it’s proven that in the communities it serves — disinvested and portrayed in mainstream headlines as violent and hopeless — there are people who have more than just vision; they can also borrow money for community improvements and pay it back.

“I see the loan fund as a very privileged place to sit in an important American economy,” Holmes says. “Serving local, disadvantaged, undercapitalized but creative neighborhood change agents still really resonates with me and has me bounding out of bed at 5:30 a.m. so I can be at my computer by six, because I know I’ve got a small universe of vulnerable, creative, community strivers who need people like me and CCLF to have their back.”

Vision runs in his blood

Holmes has that kind of vision running in his blood. His mother and grandmother both worked in community development in East St. Louis, where Holmes grew up. He still vividly remembers sitting around the dinner table listening to them talk about what the community needed and wanted in an almost entirely Black city. 

His grandparents were part of the Great Migration, leaving behind the Jim Crow south for what they hoped would be better lives in the north. And in some ways it was a better life, but it was a segregated life. They settled down in the Rush City neighborhood of East St. Louis, famous for its rural look despite being in the middle of a major metropolitan area.

“Surrounded by industry, in the armpit of the city, down by the river, under the bridge, behind the railroad tracks, by the chemical foundries,” Holmes remembers. “That’s the land that was left to migrating black folks coming up from the Delta. My maternal grandparents built the house my mom grew up in with their hands.”

It was in that house where sometimes his mother and grandmother would pore over architectural renderings and site plans for projects around the city. “I would get my hands on them, study them. [I] became fascinated by them,” Holmes says.

“I really appreciated my mother’s and grandmother’s passion for turning our hometown around, which, actually, in the 60s and 70s hadn’t degraded that much yet,” Holmes says. “It was still a pretty decent sized small city; the railroad capital of the U.S. Downtown was populated with lots of stores, the main drag, State Street, was still pretty dense with retail. Things hadn’t fallen apart yet. That didn’t really kick into high gear until the 80s with all the globalization and industrialization.”

Learning the history behind the issues

At Northwestern, Holmes — in addition to majoring in African American studies under department chair and author Leon Forrest — also minored in Urban Studies, giving him more academic exposure to the policies that drove segregation and disinvestment from Black communities in Chicago, East St. Louis and basically every city across the country where there were any Black people. 

Many in the Great Migration were seeking factory jobs in the north and west; jobs that had largely evaporated by the 1980s. Those who migrated early enough, who may have wanted to buy their homes, were largely denied the mortgages to do so because they were Black, or the neighborhood where they wanted to buy a home was known as a Black neighborhood. Worse yet, predatory real estate agents extracted what savings Black families had through the practice of contract sales.

After graduating from Northwestern, Holmes had a brief detour working at his father’s juke joint in Houston’s historically Black Third Ward before returning to Chicago to work as a transportation planner for the city. Three years later he left to get a master’s degree in Urban and Regional Planning from Cornell University, where he was also one of the first to obtain a certificate in commercial real estate.

Cutting his teeth in Baltimore

He then moved to Baltimore to work as a property manager, overseeing around 200 Section 8 units scattered throughout East and West Baltimore — the city’s famous “Black Butterfly.”

“I wanted to see what it was really like on the frontlines,” Holmes says. “Yeah, I had some cousins who’d gone to jail, but it’s one thing to know people who are poor and disenfranchised from your family Friday night fish fry and holiday gatherings and summer family reunions, and it’s another thing to know a downtrodden group of folks professionally to be responsible for, and seeing if you had what it takes to show them a better way.”

While he loved the work, Holmes says the humidity was getting to be too much for someone used to the dry heat of Illinois. And then the work shifted a bit — from trying to help folks improve themselves and their neighborhoods in the Black Butterfly, to trying to help them move out into better neighborhoods outside of Baltimore. The theory was that children would do better in more affluent zip codes, even if they aren’t from affluent households themselves. Something about the proposed solution of moving poor families into affluent zip codes didn’t sit quite right with Holmes.

“If you can imagine coming out of my household, with the passion my mother and grandmother always had — and still have — about the resurrection of my hometown, I still want to fix the zip code instead of giving up on the zip code,” Holmes says.

Back in Chicago at CCLF

So he started looking for jobs back in Chicago. He applied for a loan officer position at CCLF. He didn’t fully understand what the organization was, but he knew what he wanted out of the experience. 

“Having accepted the fact I wasn’t quite ready to move back to East St. Louis, I made the decision [that] whatever this job was in Chicago, it’s capital and it’s community development, and at the intersection of all this potential change. I’m just going to use this job as my vicarious way of working on this issue at home,” Holmes says. 

“If we could figure out ways to resuscitate some of the toughest, most disregarded neighborhoods in Chicago, that model could be replicable in East St. Louis. So, even if I’m not home doing this work in my beloved hometown, I’m doing it in Englewood, which is effectively the same place, for all intents and purposes.”

As the loan officer in the three-person organization, it was Holmes’ job to go out into the communities and meet with prospective borrowers — to get to know them and their vision, and figure out if there was some combination of public or private grant dollars plus a loan from the fund that could make their project possible. 

“We weren’t really big at the time on dragging people downtown to our offices. We went out and met them in their office, in the evening, spread out over whatever conference room, or living room, or whatever it happened to be,” Holmes says. “I still miss it to this day, and my staff can attest to this because I probably cross the line sometimes and put my fingers into things where I don’t belong as CEO.”

Everyone is treated with dignity and respect

Today, it’s Holmes’ job to maintain the same culture around lending that was easy to establish when it was just him going out to source and close deals. To illustrate that, he still uses the story about a group of public housing residents who approached him with a plan to convert a nearby abandoned school building into an indoor fish farm. They had already had a smaller-scale operation going on in their public housing complex, and had contracts lined up to supply restaurants and other buyers across the city. They had worked with another organization to draft a professional business plan, and even had $50,000 set aside from a lawsuit against the Chicago Housing Authority that they were planning to use as a down payment for the project.

“I don’t know if they had GEDs or diplomas or college degrees; we didn’t ask, it didn’t matter,” Holmes says. “I worked for months on that deal. It was such a rewarding experience to be able to treat these people — who I am sure had been laughed out the door of every bank and conference room in town— with that level of respect and professionalism.”

In the end, that deal fell through after some residents in the area caught wind of the plans and decided they didn’t want a fish farm in their neighborhood. They raised enough of a ruckus that the local alderman withheld approval to get the project started at all. But Holmes says making the deal isn’t always the point, and to him that’s one of the key differences between a nonprofit loan fund and a bank: Not every conversation has to lead to a loan, but everyone who sits down at the table with them gets treated with the highest levels of dignity and respect.

Not every conversation has to lead to a loan, but everyone who sits down at the table with them gets treated with the highest levels of dignity and respect.

“I liked this idea that we didn’t dismiss people, we didn’t disrespect people, we didn’t condescend people, we didn’t humiliate people. We treated everybody — regardless of how new you were to development, no matter how untried or untested your idea was [with respect],” Holmes says. 

“Sometimes the requests that come over the transom are a little premature, but every last one of us recognizes that’s our value proposition in the marketplace — to give community ideas a sounding board and a platform to develop further, and to get to the next level, or to stay alive if it’s a gap piece of financing, or to get to the finish line if they’re in that last mile.”

Finding funders is paramount

It’s also Holmes’ job to find and cultivate relationships with funders. In the early days, CCLF paid for its operations through grants and donations, while pooling savings from values-driven investors like religious orders of nuns and other caring folks around Chicago, using those funds to make its early loans, like one to Salsedo Press — a worker-owned cooperative printing press on the West Side of Chicago.

Foundations were also an early source of capital, providing low-interest loans known as program-related investments that private foundations can count as part of their annually required spending under Internal Revenue Service regulations. While foundations can make program-related investments directly to projects, their chief financial officers and board directors typically prefer making loans through a professional lending intermediary, even a nonprofit one like CCLF.

In the mid-1990s, changes to regulations under the Community Reinvestment Act of 1977 made it increasingly popular for banks to make loans to CDFIs like CCLF in order to meet their obligations to low-income communities under that law. Since 1999, two-thirds of CCLF’s lending capital has come from banks, along with 21 percent of its grant funding over the same period. The Trump Administration made changes to those regulations this year, and CDFI industry advocates are worried those changes will lead to a decrease in bank funding for CDFIs.

Holmes continues to search for new sources of capital to fund CCLF’s lending. In recent years, through new partnerships and federal policies, CCLF has started tapping into funds from health care systems and even borrowing directly from the U.S. Treasury.

Like other nonprofit loan funds across the country, CCLF pools capital from all its investors and makes loans to its borrowers at slightly higher interest rates, creating a source of earned income for the nonprofit. Today, interest income covers about two-thirds of CCLF’s operating costs. 

Some might question making these kinds of loans if they’re not profitable enough to sustain an organization. Each loan itself is profitable, gets paid back with interest, with less than two percent of the organization’s loans defaulting since inception. And those repaid loans get recycled into new loans to other borrowers from similar communities. 

But the organization takes care not to charge so much interest that its borrowers have to charge exorbitant rents or can only find a buyer who’s already wealthy or to sacrifice their own operational budgets just to pay off a loan. And that means — at least for now — supplementing interest income with grants and donations. 

The endgame

Again, Holmes is playing the long game. He’s working toward bringing better days back to Black Chicago within one or two generations. And it’s the vision that Holmes is sure exists in every Black neighborhood across the country, the vision that deserves the same dignity and respect from a lender as it would coming from any other neighborhood. He’d like CCLF to be totally self-sustaining someday, and he’s kept it moving toward that goal since he was a loan officer, but it won’t be worth getting there if it has to sacrifice what matters most. 

“To give people from these neighborhoods dignity and not to laugh at them, not to assume they’re smoking something because they want to do some Afro-cuisine restaurant incubator in a neighborhood that’s still losing people,” Holmes says. “That’s vision, that’s not cockamamie.”