One Community Stands Against Inflation
Oct 5 2022
RSF Social Finance is decreasing interest rates. Yes, you read that correctly.
On September 21, the Fed raised interest rates another 75 basis points, the fourth increase this year and most likely not the last. As the fed continues to increase rates to address inflation, interest rates are rising in response. Mortgage loans are up to 6.7%, the highest in 15 years. And the prime rate for small business loans is already at 5.5% and expected to rise.
Amidst these rising rates, the RSF Pricing Committee determined that the borrower rate should be lowered by 10 basis points. Effective October 1, RSF Prime is 4.5%, down from 4.6%. The interest returned to investors is also lowered to 0.25%, down from 0.35%. RSF’s revenue share (or spread) remains the same at 4.25%.
From the September quarterly Community Pricing Gathering and ongoing conversations with our community, there is a common theme: Investors are with RSF because of impact and transparency, not the interest rate. Preserving principle has been noted as the main concern. And we all want the enterprises we support to succeed. They are addressing some of today’s most pressing social and environmental challenges while also facing the lingering issues from COVID-19, including supply chain, staffing, and tariffs. We want to do what we can to help them thrive so they can continue with their important work.
Since 2009, RSF has been setting its own interest rates. Part of the decision-making process includes hosting quarterly Community Pricing Gatherings to collect input from representatives in the Social Investment Fund—investors, borrowers, and RSF staff. These gatherings provide an opportunity to learn about each other, discuss what rates will best meet the needs of all, and make recommendations for keeping or changing the interest rates. In addition to the Community Pricing Gatherings, throughout the quarter, we are in close contact with both our investor and borrower communities, and their feedback, perspectives, challenges, opinions, and experiences inform our view of the landscape.
This is a radical process, even more so in an inflationary environment where we can make decisions that counter economic trends and center and support enterprises’ financial well-being.
We host Community Pricing Gatherings and set our own prime rate to make visible the real interconnectedness in our economic relationships. At the core of our work is the desire to create change and to help move our economy from extractive to regenerative by addressing the systems that have created unhealthy conditions for people and the planet. Thank you for being in community with us.