1. Microlending Academy Peer Discussion
Efficiencies in Lending or
Finding Existing Barriers to Loan Growth

2. Today’s Agenda Review key points from OFN webinar
Review some of their suggestions
Discuss
Give feedback on role or services CAMEO could provide

3. Today’s Questions How efficient is your process?
In a time of unprecedented change in small business lending,
Where easy, fast funding is available 24/7
How efficient is your process?
Have you “mapped” your loan process?
Where are there bottlenecks?
How can you reduce bottlenecks?

4. When Efficiency is Important
Desire to grow volume and impact tends to make CDFIs interested in efficiency
If historic volume is enough, then current process tends to be seen as good enough
Change is hard & can cause disruption

5. From First Contact to Final Payment Mission + Business Model
Lending Life Cycle
From First Contact to Final Payment
Mission + Business Model
Customer acquisition
Loan Decision
Loan Servicing
Underwriting
Loan Closing
Trouble Loan Management

6. A Bottleneck Compared to What?
Only a bottleneck compared to something else
Compared to your own standard of good service
Compared to an external industry standards: Other CDFI’s, Banks or FinTech
Cultural norms and standards change as technology changes
Long-standing processes tend to get normalized and become invisible

7. Business Model Obsolete
Many businesses decline because the assumptions that inform their fundamental business decisions -- about society, markets, customers, products, technology, mission -- become obsolete.
Peter Drucker

8. Business Model Invisibility
Why is it so difficult for companies to pull off the new growth that innovation can bring?
They don’t see their current business model well enough to know if it would suit a new opportunity or hinder it, and they don’t know how to build a new model when they need it.
Harvard Business Review

9. Process Map
Customer Acquisition 1. Outreach activities 2. Client meeting
Application
1. Client meeting
2. Assessment of app
Document Collection
1. Doc list to client
2. Two follow-up calls
Underwriting
1. Create spreadsheet
2. Calls to client
Closing
1. Create closing docs
2. Insur / UC filing docs

10. Process Mapping from MMS
Auto Review
Doc Collection
Underwriting
Closing

11. Balance These Exigencies
Transactional
speeds up
Relational
slows down

12. One Way to Address Bottlenecks
What are our particular steps?
Are we happy with the # of days at each step?
Does it seem efficient to us? What about compared to others’ processes in our industry?
What type of employee is suited to each step? Some steps take a ‘deal maker’ personality. Some are ‘administrative.’

13. Measuring Efficiency Number of days on each step Cost per loan
Conversion rates
Repayment rates
Default rates
Number of loans per employee

14. Examples from CDFI Presenters
Assessed performance of each staff person in terms of volume and repayment
Made performance by lender public information in monthly tracking format
Tracked & distributed number of days for each step over time

15. More Examples
Created lending dashboard, updated daily, posted organization-wide: lending volume, deployment rate, size of pipeline, jobs created – all compared to goals
Team integration
Loan officers no longer close deals; dedicated closing staff
Align funder reporting and covenant requirements on borrowed funds

16. OFN Webinar Series Small Business Landscape February 11
Topic Date
Small Business Landscape February 11
Business Model Canvas March 3
Value Proposition March 24
Customer Acquisition April 14
Lending Life Cycle–Efficiencies May 5
Lending Life Cycle –Technology May 26
Talent Management June 16

17. Thanks!!