Project Cue: Six Month Milestones and The Road Ahead

 

The first six months since AEO won the CDFI Fund's Innovation Challenge and launched Project CUE have kept our team busy. Our focus was on design thinking and discovery, garnering insights that will help build a screening and assessment tool that matches small business owners with CDFIs after they've been declined for loans from banks or online lenders. This post is about work we've done to ensure the broader adoption and success of Project CUE beyond Year 1. 

Bank Referrals

Good news: Project CUE has confirmed its first bank referral partner! Banking partners are vital to the success of the project because they are the source of referrals--small business owners declined for a loan--that we connect to CDFIs, as well as providing the necessary insights to build the CUE platform and the critical customer data that allows us to test the solution. We have many more engagements in the works and look forward to announcing our initial consortium of bank referral partners very soon. Stay tuned.

EconoCon

In addition to lining up bank partners, last month the Project CUE team attended AEO'sEconoCon conference, which celebrated AEO's 25th Anniversary. EconoCon convened small business experts, bankers, community funders, and policymakers in Washington, DC and explored topics that will shape the future of Main Street. This year's theme,

Powered by Inclusion, brought together some of the most respected thought leaders from a variety of sectors to further the national dialogue on how to engage and support underserved entrepreneurs. One of the well-attended and engaging sessions featured a panel moderated by award-winning journalist Roland Martin. In it, the panelists addressed issues affecting black entrepreneurship: job creation, the wealth gap, and the history of African-American relationships with business and financial institutions. One of the panelists was none other than Jessica Norwood, who was interviewed in our previous blog post about Project CUE.

Before the conference was officially underway, we convened a working session that included representatives from all types of stakeholders, such as a bank; CDFIs (ACE,Intersect Fund, Justine Petersen, Lift Fund); a local Hispanic Chamber of Commerce; nonprofits that offer affordable work space and educational opportunities for entrepreneurs; and an investment fund with focus on small and medium size businesses. The goal of this meeting was to gather stakeholders across different ecosystems that overlap with Project CUE's mission to help small business owners succeed. An important topic of conversation was how various stakeholders could better work together. Certainly, the Project CUE platform can be a critical piece of the necessary infrastructure to support scale. More to come on this front.

Making Progress

Last month, we provided an update on our progress to Annie Donovan, the Director of the U.S. Department of the Treasury's CDFI Fund. We shared how we've learned that the solution will need to help avoid "double-declines," preventing small business owners from getting rejected for a loan twice: once by the bank and another time by a CDFI in the Project CUE network. One way that the project has evolved to address that issue is to allow bank referral partners and CDFI lenders to more dynamically manage their "credit box," i.e., the various criteria (such as a business owner's personal credit score or the loan amount requested) upon which a loan application is more likely to be approved. That makes the match between business owner and CDFI lender much more precise and likely to result in a successful loan application.

Director Donovan was interested in how Project CUE will structure the online application to capture key points of information from the recently declined business owners. She was happy to learn from our CDFI partners that 95% of CDFIs ask for the same data, making our goal for a "common application" fairly plausible. Director Donovan concurred with that goal, stating that "as an industry we have to enable more standardization where that will lead to increased impact." Our CDFI partners also voiced that the Project CUE solution could ease the amount of time and money it takes to find new clients because our platform would allow them to filter candidates based on their established criteria. Overall, it was a productive meeting.

The Project CUE team's work this past month or so underscores how tackling a specific portion of the process -- matching bank declines with referrals to CDFIs -- can have an impact on the entire small business landscape. While we are focused on enabling the platform for widespread industry adoption between banks and CDFIs, we must also be conscious of parallel ecosystems that also assist small business owners and work to ensure our system is interoperable with them, too.

What are other ecosystems out there that we should integrate and make interoperable with the CUE platform? 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.

Do you have an idea for an innovation to help expand CDFI investments and increase access to capital in underserved rural areas, particularly those that are characterized by persistent poverty? The CDFI Fund recently announced their FY 2016 CDFI Fund Prize Competition which will "reward selected applicants with monetary prizes, totaling up to $1,000,000, for innovative proposals that (1) identify and promote new ideas and practices, thereby facilitating their implementation by CDFIs that serve rural areas, and/or (2) create value during and after the competition by encouraging CDFIs that serve rural areas to develop new skills or practices that may have beneficial effects on the rural areas they serve."

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