One of the primary challenges that CEF has faced so far is one of the most essential: how do we ensure repayment? From the traditional banking standpoint, the main determinant of whether or not a loan is approved with whether or not the loan officer judges that the borrower will be able to repay. We are, of course, also concerned with a borrower's ability to repay, but mainly from the standpoint that we want the loaned funds to first and foremost contribute to that individual's personal advancement. In the commercial sector, the "5 C's" they define as criteria in loan approvals are: capital, collateral, credit, capacity and character. We have had to find our own ways to build towards these 5 C's, and alternative ways of measuring and defining these traits in an applicant.
One related question always comes back to how can we make the process easy, but not too easy -- so that it can be at least a little bit self-selecting, but not prohibitive. We are still working to find a balance between up-front requirements that can tie people to the program while allowing us to build credit and collateral internally, and a program that can remain flexible and responsive to individual's time constraints and particular circumstances.
These and related questions will be the main point that I will be trying to get at in my upcoming interviews.
Wednesday, July 29, 2009
Sunday, July 19, 2009
July Prompt
- Briefly describe the current status of your project.
- How does your CBR experience compare to your initial expectations?
- What has been the most rewarding and challenging aspects of working with your community partner?
Currently, CEF has approved 5 loans and has 4 pending. So, we got off to a slow start recruiting, intaking, and approving applications, but we have a groove now and are definitely on a roll. Referrals are more often coming on an applicant-to-applicant basis (or borrower-to-applicant, depending), and from our outreach events.
I think that my experience so far is more or less in line with my initial expectations. Initially, I was of course hoping that everything would run smoothly, all borrowers would always show up to group meetings and interviews, and that all borrowers would show incredible and rapid progress. But I think I always knew that realistically, we would hit snags, people would miss meetings, miss payments, and we would find ourselves in a tough spot every once in a while. And that has all happened, and every time, we as a group find ourselves in the position to make a decision, and we make it, I record it, and that decision essentially becomes a part of the way the pilot is operating. For example, just today the borrower whose loan application we approved most recently let us know that she would not have the funds to make her savings deposit until August 7th, which means that she would not be able to get her loan disbursement until then. We talked with her about options because she is taking out a loan for a bus pass to get to school in Durham and is currently on a short-term leave of absence from her school. We talked with the group and were able to figure out that even though we approved her loan for the full $300, she could make her first month bus pass purchase and her books next week, hold the loan funds for the second month bus pass, and that would bring her initial savings deposit down from $25-30 to $14-$15, which she could afford to make sooner. Then, when she is ready to get her second month bus pass, she would just need to make another $10 savings deposit in addition to her loan repayment that particular week. This will make it possible for her to go back to school sooner, get out sooner, and get full-time employment sooner.
Additionally, I have two formal interviews scheduled with two of the borrowers this week to discuss how the program has worked for them thus far. So far, these two borrowers have primarily experienced the application and approval process, so we will be talking together to assess that process, weaknesses, strengths, things to change, things to consider that we may have never thought of before, and in general -- does the process work for the applicant? In the following week, I will be holding similar interviews with a couple of the loan officers asking essentially -- does the process work for the volunteers? We'll be coming together in one of the coming borrower group meetings and holding a focus group post-meeting to talk about how to address issues that come out in these interview sessions.
The most rewarding aspect so far with this project has just been seeing that there is a GREAT demand for this program and that as soon as you start talking about it, people listen, ask questions, get ideas, and get moving. When I was working on planning this project, it was easy to loose sight of whether or not this loan program would actually be of any service to anyone or whether it could really be useful, so it has been incredibly rewarding to see that it is in such demand and people view it as a legitimate and unique opportunity, which is everything I hoped.
The next has been to see that the application process is truly self-selecting in many ways. Those that follow through with the application, the multiple meetings with loan officers, and the up-front savings truly are qualified to borrow. The next rewarding aspect has been working with the CEF volunteers. They are amazing, and have truly come to appreciate that just as much as our first borrowers are pilot borrowers, they are all pilot loan officers and this position will be exactly what they make of it. Their impact on the program as individuals, even though all joined on just in May-June, has been incredible. They are the people that have made this thing that has been a figment of all of our imaginations for so long into a working and constantly innovating pilot program, and I have to say, I am truly fortunate that they all randomly got on our summer listserv.
The next rewarding thing actually just happened. One of the men I have worked with for a long time on another project, Talking Sidewalks - a literary magazine written by individuals living on the street or in the shelter, applied for a loan today. He applied for a small loan, just for a cell phone, and looking at his finances knows that he will be able to pay it off shortly. He is really interested in the program because of the small business planning, small business taxes/accounting, and those types of counseling services that we can either provide or put him in touch with. But his ultimate goal with us is to be a loan officer, which is really my ultimate goal for the program -- that as borrowers graduate, they can stay involved with the program by doing outreach, working as a loan officer, and being there as one-on-one, been there and done that mentors. And this man in particular would do a fantastic job as our first loan officer who is also a graduated borrower.
I am working on posting to this blog more often now, so please expect more soon. I post a great deal to the project blog, specifically every time a decision is made within the pilot and every time we discuss an applicant or intake. Please just send me a quick email if you would like to read more on the past couple months of operation on the project blog, which is at http://thecef.blogspot.com, and is permission-only for privacy purposes.
- How does your CBR experience compare to your initial expectations?
- What has been the most rewarding and challenging aspects of working with your community partner?
Currently, CEF has approved 5 loans and has 4 pending. So, we got off to a slow start recruiting, intaking, and approving applications, but we have a groove now and are definitely on a roll. Referrals are more often coming on an applicant-to-applicant basis (or borrower-to-applicant, depending), and from our outreach events.
I think that my experience so far is more or less in line with my initial expectations. Initially, I was of course hoping that everything would run smoothly, all borrowers would always show up to group meetings and interviews, and that all borrowers would show incredible and rapid progress. But I think I always knew that realistically, we would hit snags, people would miss meetings, miss payments, and we would find ourselves in a tough spot every once in a while. And that has all happened, and every time, we as a group find ourselves in the position to make a decision, and we make it, I record it, and that decision essentially becomes a part of the way the pilot is operating. For example, just today the borrower whose loan application we approved most recently let us know that she would not have the funds to make her savings deposit until August 7th, which means that she would not be able to get her loan disbursement until then. We talked with her about options because she is taking out a loan for a bus pass to get to school in Durham and is currently on a short-term leave of absence from her school. We talked with the group and were able to figure out that even though we approved her loan for the full $300, she could make her first month bus pass purchase and her books next week, hold the loan funds for the second month bus pass, and that would bring her initial savings deposit down from $25-30 to $14-$15, which she could afford to make sooner. Then, when she is ready to get her second month bus pass, she would just need to make another $10 savings deposit in addition to her loan repayment that particular week. This will make it possible for her to go back to school sooner, get out sooner, and get full-time employment sooner.
Additionally, I have two formal interviews scheduled with two of the borrowers this week to discuss how the program has worked for them thus far. So far, these two borrowers have primarily experienced the application and approval process, so we will be talking together to assess that process, weaknesses, strengths, things to change, things to consider that we may have never thought of before, and in general -- does the process work for the applicant? In the following week, I will be holding similar interviews with a couple of the loan officers asking essentially -- does the process work for the volunteers? We'll be coming together in one of the coming borrower group meetings and holding a focus group post-meeting to talk about how to address issues that come out in these interview sessions.
The most rewarding aspect so far with this project has just been seeing that there is a GREAT demand for this program and that as soon as you start talking about it, people listen, ask questions, get ideas, and get moving. When I was working on planning this project, it was easy to loose sight of whether or not this loan program would actually be of any service to anyone or whether it could really be useful, so it has been incredibly rewarding to see that it is in such demand and people view it as a legitimate and unique opportunity, which is everything I hoped.
The next has been to see that the application process is truly self-selecting in many ways. Those that follow through with the application, the multiple meetings with loan officers, and the up-front savings truly are qualified to borrow. The next rewarding aspect has been working with the CEF volunteers. They are amazing, and have truly come to appreciate that just as much as our first borrowers are pilot borrowers, they are all pilot loan officers and this position will be exactly what they make of it. Their impact on the program as individuals, even though all joined on just in May-June, has been incredible. They are the people that have made this thing that has been a figment of all of our imaginations for so long into a working and constantly innovating pilot program, and I have to say, I am truly fortunate that they all randomly got on our summer listserv.
The next rewarding thing actually just happened. One of the men I have worked with for a long time on another project, Talking Sidewalks - a literary magazine written by individuals living on the street or in the shelter, applied for a loan today. He applied for a small loan, just for a cell phone, and looking at his finances knows that he will be able to pay it off shortly. He is really interested in the program because of the small business planning, small business taxes/accounting, and those types of counseling services that we can either provide or put him in touch with. But his ultimate goal with us is to be a loan officer, which is really my ultimate goal for the program -- that as borrowers graduate, they can stay involved with the program by doing outreach, working as a loan officer, and being there as one-on-one, been there and done that mentors. And this man in particular would do a fantastic job as our first loan officer who is also a graduated borrower.
I am working on posting to this blog more often now, so please expect more soon. I post a great deal to the project blog, specifically every time a decision is made within the pilot and every time we discuss an applicant or intake. Please just send me a quick email if you would like to read more on the past couple months of operation on the project blog, which is at http://thecef.blogspot.com, and is permission-only for privacy purposes.
Subscribe to:
Posts (Atom)