The New Economy Glossary

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Non-extractive Finance

Non-extractive finance is a way of lending that benefits communities, while building wealth for borrowers rather than lenders. The three most common terms of a non-extractive loan are:

  • No repayments greater than profits: Borrowers are not required to make interest or principal repayments until they are able to cover operating costs, including market-rate salaries
  • No personal guarantees: Financing agreements never use assets for security unless the asset has been purchased with the financing agreement proceeds
  • No credit scores: Instead of credit scores, Seed Commons uses close relationships between local loan officers and potential loan recipients to establish a borrower’s reliability

Source: Seed Commons



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