Where: New Cuyama, California
Problem: The COVID-19 pandemic disproportionately impacted residents of the geographically remote community. The prolonged public health crisis caused residents to default on emergency loans given to those financially impacted by shelter-in-place orders and business closures.
Solution: Rural Community Assistance Corporation (RCAC) provided California Department of Community Services and Development (CSD) Coronavirus Aid, Relief, and Economic Security (CARES) funding to Blue Sky Center (BSC), a partner organization in RCAC’s Building Rural Economies (BRE) program. The funds were used to cover defaults on the emergency loans and forgive the final installment for borrowers who had made regular payments through November 2021.
The Cuyama Valley is a remote, rural region in unincorporated Santa Barbara County, California, located at the intersection of Kern, San Luis Obispo, Santa Barbara and Ventura counties. The valley is home to approximately 1,100 people, the majority of whom are Hispanic or Latino/a. HUD classifies 81 percent of residents as low-income. The valley is a 300-square-mile area surrounded by public land that is cut off by the surrounding mountains from most social, economic and public health opportunities in the closest urban centers. The community is over 30 miles from the nearest grocery store and is categorized as a food desert, while the scarce water resources are overdrawn by large-scale agriculture.
The COVID-19 pandemic triggered mass layoffs and other economic shocks that pushed an already vulnerable population into an even more difficult financial situation. Place-based nonprofit organization BSC established a rapid response cash assistance microloan program in April 2020 to assist Cuyamans faced with significant and prolonged income loss. BSC disbursed no-interest loans that averaged $539 to 15 families from April 2020 through May 2021 for a total of $8,089.
As the pandemic and associated recession continued unabated, BSC grew concerned that loan recipients could not repay their loans. BSC connected with RCAC, an organization with an extensive track record of work in the Cuyama Valley, to help resolve the bad debts to avoid the possibility that defaulted borrowers could be brought to court to recover the funds – a move sure to undermine the hard-earned community trust and confidence.
RCAC passed through funds to BSC to cover loan defaults and forgive the last installment for borrowers who made regular payments through November 2021. While the good borrower forgiveness amounts were limited to $100 per person, the impact was significant for families that faced ongoing difficulties affording utilities, groceries and other basic needs just before the holiday season.
“The money for forgiveness helped alleviate that burden so that there wasn’t someone feeling that they couldn’t pay, and they would keep their distance from us,” said BSC co-Executive Director Jack Forinash. “We appreciate RCAC for coming in with this funding because some people simply couldn’t pay it back.”