Project CUE: Questions and Answers
September 1, 2016
As you may know by now, AEO won the CDFI Fund’s Innovation Challenge at the end of 2015. Our winning bid proposedto build a screening and assessment platform to match small businesses declined by banks for loans with community lenders that may be able to meet their needs. That platform, Project CUE (Connecting Underserved Entrepreneurs), continues to progress.
Our previous blog post unveiled snapshots of CUE’s user experiences for business owners, referral partners, and community lenders. We’re also happy to report that initial feedback from users in those three stakeholder groups has been positive.
Also, in July more than 100 people attended our webinar offering a preview of the CUE platform. Annie Donovan, Director of the CDFI Fund, part of the Department of the Treasury, kicked off the webinar with a brief synopsis of the CDFI Fund’s commitment to transformation through their Innovation Challenge program. Then Tammy Halevy, Senior Vice President of New Initiatives at AEO, led an overview of the project, featuring a brief discussion with representatives from two of the four early-adopting community lenders participating in CUE: Sheri Flanigan-Vazquez, Chief Operating Officer at JustinePetersen and Celina Pena, Chief Program Officer at Lift Fund. We also discussed next steps for how community lenders and referral partners could get involved in the next phases of CUE. If you missed it, you can still watch the webinar video. Our next webinar will be held on Thursday, 8 September at 1 pm eastern. Click here to register.
For now, though, here are some of the most popular questions posed during the first webinar:
What happens to an applicant that was previously declined by a traditional financial institution and is also determined not a good fit for a CDFI (Community Development Financial Institution)? While the ultimate goal is to match every application with a community lender in the CUE network, we anticipate there might be some applicants whose business age and stage might benefit from support from a different type of partner. The team is exploring matching applicants to alternative forms of support for earlier stage companies, including coaching/mentoring, crowdfunding platforms and other types of support services.
Is there a cost for CDFIs and Community Lenders participating in Project CUE? At this stage, there is no cost to participate in CUE.
Will CUE be rolled out nationally? Can a CDFI from anywhere in the U.S. join CUE? The goal–at this stage–has been to achieve “proof of concept,” so we started with a more targeted geographic distribution. The first cohort of CDFIs represents geographic diversity including coverage in 22 states. Our ultimate objective is to match small business applicants anywhere in the U.S., so we anticipate on-boarding additional cohorts of CDFIs.
How did you get banks to participate? Our strategy was to engage as many banks as possible for feedback on the concept and to better understand institutional appetite to be an early adopter of the Project CUE solution. The project team leveraged the Innovation Challenge award and AEO’s extensive networks to engage with executives at leading financial institutions. We generally started with executives in the Community Development, CRA, CSR, and corporate philanthropy areas and quickly sought introductions to their colleagues in other units including small business lending, compliance, legal,and IT whose feedback and buy-in is imperative for adoption of the Project CUE solution. During our discussions with banks, we learned even more about their specific business needs and technical requirements, as well as their previous challenges with scaling up referral programs. These insights and continued dialogue helped inform the design of the Project CUE solution so that it meets the needs of bank referral partners and their customers, in addition to CDFIs.
Will CUE work with non-bank fintech small business lenders? If so, are there any screening or eligibility criteria to ensure that small business borrowers will get access only to safe and affordable loans? CUE intends to accept referrals from non-bank and fintech lenders as well. As for ensuring that small business borrowers are matched only to safe and affordable loans, participating community lenders will be required to accept product and performance standards that will be detailed in CUE’s Service Level Agreement (in development).
Will lenders receive Community Reinvestment Act(CRA) credit for their participation in the CUE referral program? While the activities associated with Project CUE can represent elements of the lending, investment or service tests, we do not yet have a definitive answer to this question. We will continue to engage in dialogue on this theme. Stay tuned!
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What questions do you have about Project CUE? Let us know in the comments or find us on Twitter!
What is Project CUE? In 2015, the U.S. Department of the Treasury’s inaugural CDFI Innovation Challengecalled for submissions of proposals to help expand the capacity of financial institutions to provide credit, capital, and financial services to underserved populations and communities in the United States. AEO’s winning bid proposed building a platform to move loan applicants “from decline to delight” to appear at the critical point in the lending process when an institutional lender declines an applicant and pivot that moment into an opportunity to introduce CDFIs as potential lenders.