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Tricolor wants to expand conventional financing for Hispanic communities. Photo: Pixabay.

Tricolor earmarks $224 million to scale up impact to Hispanic communities

The CDFI wants to expand inclusion and upward financial mobility for 'credit invisible' Latinos.

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Tricolor, a U.S. Department of Treasury certified Community Development Financial Institution (CDFI), recently announced the issuance of a second social bond worth $224 million to empower low-income and underserved communities with better access to conventional financing.

Daniel Chu, Tricolor founder and CEO, stated:

We’re extremely pleased with the continued validation of our ability to leverage technology to create both a physical and financial mobility solution for underserved Hispanics.

Get to know: Tricolor

Using artificial intelligence (AI), Tricolor provides access to affordable loans to extend credit to what they refer to as ‘invisible customers.’

By offering support for reliable and affordable transportation that get them into the financial mainstream, investors are part of the company's strategy to fight systemic financial inequality in America.

“Attracting investor demand that exceeded $700 million, or greater than 3x the offering size, at Tricolor we believe that consistently strong demand for our securities reflects capital markets investors’ embrace of our ability to provide customers with the opportunity for a better future, an enduring American value. Furthermore, we successfully added a number of new prominent ABS investors to supplement continued participation from our last transaction, growing the number of participants to 19 unique investors,” added Chu.

Supporting underserved Hispanics

Drawing on data from the FDIC's National Survey of Unbanked and Underbanked Households, which shows that 32% of the U.S. Hispanic population has limited or no access to conventional credit, Tricolor works with AI and nearly 15 years of proprietary customer insights to unlock financially inclusive opportunities for low-income Hispanics.

To date, Tricolor has disbursed more than $2 billion in affordable auto loans as part of its mission to empower underserved Hispanics and provide them with a path to a better future through mobility and upward financial mobility.

The new social bond aims to guarantee loans that provide affordable access to low-income borrowers without a FICO score to finance the purchase of a motor vehicle.

Tricolor obtained a Second Party Opinion (“SPO”) from S&P Global Ratings to provide an opinion on the social benefits of the framework, and in alignment with the International Capital Markets Association (ICMA) Social Bond Principles.

“As we execute and expand our core business strategy, the achievement of a social purpose is a natural outcome. It was encouraging to experience growing demand for our value proposition in 2022, increasing our unit sales volume by 33% while the industry declined in the low double digits,” said Chu.

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