Five credit unions are beta testing a Small Business Administration-compliant lending tool as part of a partnership between the National Federation of Community Development Credit Unions and Minneapolis-based Community Reinvestment Fund, USA.
CRF, which developed the software, said the solution facilitates the origination process - from application to closing - for both lenders and borrowers. The target is loans ranging in size from $25,000 to $5 million.
Participating in the beta testing are Alternatives Federal Credit Union, Lower East Side Peoples Federal Credit Union, Neighborhood Trust Federal Credit Union, Case Credit Union and Dakota Plains Federal Credit Union.
"The Federation is pleased to join forces with CRF, a fellow CDFI that is nationally recognized as a leading lender to small businesses, on this important initiative," Cathie Mahon, Federation president and CEO, said in a statement. "This collaboration marks a milestone for the community development finance field, harnessing the expertise, tools and technologies across diverse institutions to reach new populations, establish greater efficiencies, and increase investment in underserved communities."
CRF is a community development financial institution (CDFI); the Federation is a CDFI intermediary that advocates with the CDFI Fund on behalf of all credit unions.
CRF said it designed the software, named Spark, with a focus on the borrower, as well as the lender, experience. While many existing platforms target the lender as the customer, CRF said Spark "integrates the borrower into the lending process every step of the way."
Automated CDFI Fund Reporting
The software provides automated CDFI Fund reporting for closed loans, a feature the two parties said will be of particular interest to CDFI credit unions. It also facilitates the selling of the guaranteed portion of the loan on the secondary market.
According to CRF, the Spark platform uses data from multiple sources to grade the loan as the application is built, reducing processing time. To date, CRF has processed more than 300 loans and says it has reduced the processing time on many applications by as much as 40%. At present, the software supports SBA Small Loan Advantage, Community Advantage, International Trade and full SBA 7(a) loans and is slated to include SBA Express loans later this month.
CRF said Spark is a cloud-based platform that is secure, modular and configurable to adopt the look and feel of the lender's website. Spark integrates with FICO, Equifax, Google Maps, MS Dynamics CRM, TRF PolicyMap and SBA's E-TRAN Origination system.
Promoting CU Business Lending
The Federation reported it received funding from CapitalOne and Citi Community Development to promote business lending in credit unions and to facilitate collaboration as a means of increasing scale and impact. Upon an extensive review of the SBA-compatible offerings in the marketplace, the Federation said it ultimately selected CRF as a partner because of the organization's "commitment to community development coupled with the strength of the platform, and the commitment CRF has made" to developing a lasting partnership.
"We are committed to helping our fellow CDFIs grow their small business lending by increasing their efficiency," said Frank Altman, president and CEO of CRF. "We are excited to work with the Federation and its members to make that happen."
"As a mission-driven, SBA Preferred Lender, CRF can often provide financing when others can't or won't. Our SBA lending platform is an option credit unions interested in supporting their communities and creating jobs will want to explore," said Nick Elders, VP of technology solutions and services at CRF.
The Federation and CRF are previewing the Spark business lending platform at the Federation's Annual Conference in Phoenix this week.
