NEW YORK–The National Federation of Community Development Credit Unions said it is partnering with the Minneapolis-based Community Reinvestment Fund, USA to provide a Small Business Administration (SBA)-compliant business lending solution to credit unions originating small SBA loans between $25,000 and $5,000,000.
According to the Federation, the software developed by CRF facilitates the origination process–from application to closing–for lender and borrower. Five credit unions–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–are currently beta-testing the software in a credit union environment.
“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,” said Federation President/CEO Cathie Mahon 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 whose mission to improve the lives of disadvantaged people and strengthen distressed communities through innovative finance is closely aligned with the Federation’s mission to help low-income people and communities achieve financial independence through credit unions. The Federation is a CDFI intermediary that advocates with the CDFI Fund on behalf of all credit unions.
The software also provides automated CDFI Fund reporting for closed loans, a feature that will be of particular interest to CDFI credit unions, plus facilitates the selling of the guaranteed portion of the loan on the secondary market, the Federation said.
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 has reduced the processing time on many applications by as much as 40%, according to the Federation. 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.
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.
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 ultimately selected CRF as a partner because of their commitment to community development coupled with the strength of the platform, and the commitment CRF has made to developing a lasting partnership.