Goldman Sachs 10,000 Small Businesses, the Surdna Foundation, and Opportunity Finance Network awarded this year's Small Business Leader Award for Mission-Driven Lenders (SBLA) to four CDFIs: Accion, serving Arizona, Colorado, Nevada, New Mexico, and Texas (Accion), Carolina Small Business Development Fund (CSBDF), Community Reinvestment Fund USA (CRF), and Montana & Idaho CDC. The SBLA, now in its third year, recognizes innovation and growth in mission, impact, and financial sustainability among mission-driven small business lenders. This year’s awardees were chosen from among the highly-selective Small Business Finance Collaborative, a group of lenders who have worked together over the past two years to develop and implement ambitious growth plans for their  businesses.

CDFI Connect caught up with the winners to hear more about the lessons learned in the Collaborative, and what this award means to each winning organization. Greg Henderson, Vice President of Finance, Accion; Lenwood Long, president and CEO, CSBDF; Keith Rachey, Senior Vice President and Chief Operations Officers, CRF; and Dave Glaser, President, Montana and Idaho CDC participated.

How has the collaborative reshaped the way you do business/think about small business financing?

(Greg Henderson) The Small Business Finance Collaborative has been a wonderful partner in supporting Accion’s work to increase small business lending across the five-state region we serve. The training and peer-learning opportunities provided by the collaborative encouraged Accion to set an ambitious goal of increasing small business lending from three percent of all dollars lent per year, to nine percent of total dollars lent, and to do it in just three years. To achieve this goal—which we did in 2016—Accion diversified its product offerings and developed internal capacities to better serve and respond to the needs of small business clients.

(Keith Rachey) This forum has allowed us to connect with other similar types of organizations to ensure that we are doing the right thing and that we have the support and systems in place to grow our small business lending. It has been very helpful to share best practices and has also given us something to benchmark against.

(Lenwood Long) The collaborative has encouraged us to search for ways of becoming more efficient in delivering our products and services.  Also, we now utilize the tools and concepts discussed in the collaborative in evaluating and implementing any significant growth opportunities.

(Dave Glaser) The work we’ve done in the collaborative has completely changed the way we do business. We realized relatively quickly that the way we’d been lending for years didn’t scale very well. It relied on assumptions that didn’t make for a great business model. It was clearly time to rethink our lending.

What we developed over the two years was a “path to bankability.” Every new small business client, from the moment they receive a loan, now has a plan with a banker to get to bank financing in a set amount of time, with criteria that need to be met and clear goals for our consulting team. The goals are to speed up our capital, making twice the number of loans in the same period of time, which makes our lending self-sustaining, improves outcomes for our clients and ultimately is a much better for our mission. 

What does it mean to win the Small Business Leader Award?

(GH) The award serves as an encouraging sign to our staff and senior management team to continue our work to serve more small businesses, and to embrace change and innovation with agility and openness.

(LL) Helping small businesses is our passion. Our intent has always been to elevate our work to help underserved communities and entrepreneurs build the businesses of their dreams. Being a recipient of the SBLA is a confirmation of our intentional efforts to serve small businesses and provide them with the right tools and guidance they need to succeed and build a healthy resilient state economy. 

(KR) This award is a recognition of the hard work and dedication of the CRF team as well as an acknowledgement of our efforts to collaborate with others to grow the capacity and capabilities of our industry.

(DG) The SBLA is a humbling recognition of the work we’ve done changing the way our small business lending works. And it’s inspiring that OFN, Goldman Sachs and Surdna Foundation are focused on supporting innovation and better outcomes for the people we serve.

What changes did you make to come up with your winning strategy?

(GH) This experience allowed us to think creatively to better respond to small business owners’ needs and provide attractive and accessible products. Internally, Accion deepened our underwriting capacity so that we could approve more small business loans. This had the effect of increasing our small business lending as a portion of overall lending, and it also helped our team further develop skills and grow confidence in our underwriting abilities.

Improving the development and utilization of technology was also a key organizational goal for Accion. In partnership with the Accion U.S. Network, we are in the process of implementing a unified application and loan processing database, known as the Accion Modernization Project, or AMP, which  will create an end-to-end loan servicing platform.

Finally, Accion responded to the prevalence of merchant cash advance (MCA) products being marketed to small businesses by creating the Accion Split Funding Loan as an alternative. The product provides entrepreneurs with a healthy level of debt they can afford at rates that are less than half what they would pay elsewhere with repayment terms that match their proceeds.

(LL) We realized that to have a deeper impact, we needed to really take a look at the challenges facing the small businesses that have come to us for a loan, specifically those businesses we were unable to finance. Our analysis showed that businesses faced four primary challenges: creditworthiness, lack of collateral, insufficient equity, and a need for business skills. This is what our Carolina Small Business CARES program seeks to address. For applicants who face these challenges and need that extra help, we can provide a loan approval and an Action Plan to help them overcome their specific challenges. We believe that if a small business owner meets their benchmarks outlined in their Action Plan, not only will they be able to access capital, but they will be gaining the tools and skills for their future business success.

(KR) We are taking a more holistic approach to our 3-year growth strategy. We refined our value proposition and strengthened our resolve to embrace technology as a key enabler for CRF and the industry to grow and remain relevant in the small business lending space.

(DG) We studied and rebuilt almost every part of our lending process and operational infrastructure. We analyzed our data and determined our customer segments, then customized our lending and technical assistance packages by client segment rather than by individual borrower. We figured out how to quickly separate lending inquiries into high-, medium- and low-risk segments (using an algorithm based on our 30 years of borrower data) and then automated parts of the underwriting process for low-risk borrowers. We made our internal processes shorter and easier—simplifying our loan application, policies and procedures, and credit presentation, and implementing Salesforce to track inquires and borrower ‘path to bankability’ plans. And we’re decreasing the average loan stay in our portfolio from 36 to 18 months in order to double our annual lending with the same size loan fund. We’re seeing early signs of success toward making our lending self-sustaining, improving mission impact, and better serving clients. It’s exciting.

What is the biggest lesson you take away from this collaborative?

(GH) We’ve learned a great deal as a result of the collaborative. The lending life cycle exercise identified the main constraints in Accion’s lending cycle and moved the organization to think about how to resolve these issues and make improvements. The lesson, going forward, is that Accion needs to set aside time and resources on a regular basis to think about and update how this material applies to our organization.

Participation in the collaborative has also encouraged us to remain flexible and responsive to marketplace trends by offering new products and developing internal capacities.

(LL) As a CDFI and an industry we must continue to find creative ways to reach the underserved communities we serve.  In addition, we must be willing to partner or collaborate with others, including CDFIs, to find ways to deepen our impact in our communities.

(KR) It is more critical than ever for the CDFI industry to collaborate to compete in an ever-changing small business lending landscape. Working together, we can take the best parts of the online small business lending marketplace and provide a responsible financing alternative to the people and communities we serve.

(DG) We’ve sent quite a few clients to the 10KSB program over the years and heard their enthusiastic reviews. It was eye-opening for us to go through that same process—to do for our organization what we’ve asked our borrowers to do. And then our board chair was so impressed by what we’ve been up to that he applied to 10KSB with his own business.

For us, a big lesson from the collaborative was to look not only to leading-edge CDFIs but also outside the industry for lessons that we can apply to our mission-focused work. There’s always more to learn. We can always be smarter, faster and better.

Now that the collaborative has come to an end, are there ways you will continue to work with your peers in the cohort?

(GH) Accion will continue to engage with them to learn about new and innovative ways to increase small business lending. The collaborative has supported Accion in building its network of peers and learning about best practices and strategies to make us more effective in fulfilling our mission.   

(LL) There have been many professional relationships formed as a result of the collaborative.  So, absolutely, we will utilize the cohort to discuss new opportunities, successes, failures, industry and competitive trends, etc.

(KR) CRF and seven other collaborative members have agreed to join forces to move forward, innovate in defined ways and scale mission-driven small business lending across the country. Together, with support from great funders, we can continue to look at the best ways to deploy high impact capital to small businesses at scale.

(DG) We are available not just to our colleagues in the cohort but to any CDFI to share what we’re doing. We’ve received a tremendous amount of help from CDFIs in the past, and we feel grateful to be in a position to share what we’ve learned with others. That collaborative spirit is something I really love about this industry.


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