WASHINGTON–The Community Development Financial Institutions Fund (CDFI Fund) has named the Association for Enterprise Opportunity (AEO) as the winner of its 2015 Innovation Challenge.
As a result, the AEO has been awarded a one-year contract to test an innovative way of partnering Community Development Financial Institutions (CDFIs) with small businesses in low-income areas that need investment.
The CDFI Fund created the Innovation Challenge to seek new ways to expand or increase investments in underserved communities across the country, especially in rural areas. AEO won the Challenge with a proposal to develop a screening and assessment tool to match small businesses searching for loans from banks or online lenders with a CDFI that may be able to meet their needs when other lenders cannot.
“This is the first time the CDFI Fund has awarded a contract specifically to experiment with new tools to expand the reach of CDFIs nationwide,” said CDFI Fund Director Annie Donovan. “I am excited to see both what we will learn over this next year and how we’ll be able to apply those lessons to our future support of CDFIs.”
According to the CDFI Fund, every business day 8,000 requests for credit from small businesses are denied.
“Many small businesses that are unable to receive loans from a bank or online lender may be eligible for assistance from a CDFI,” the CDFI Fund said. “AEO’s tool will create a mechanism for small business lenders to refer potential borrowers to certified CDFIs. The tool will screen and sort the referrals and match them to partnering CDFIs, who will then review and assess the borrower’s profile and determine if they are a good fit for one of their loan products. The first cohort of CDFIs include: Access to Capital for Entrepreneurs (Georgia), the Intersect Fund (New Jersey), Justine PETERSEN (Missouri), and LIFT Fund (Texas).”