In recent years, small businesses in the U.S. have faced significant challenges, ranging from the pandemic and natural disasters to economic headwinds like inflation and higher interest rates. These obstacles have tested the resilience of small businesses and put a spotlight on their difficulties in accessing affordable capital. For the smallest and most vulnerable businesses, this lack of access has remained a critical hurdle, underscoring the need for innovative solutions and targeted support.

Traditional banks have underwriting standards and loan sizes that may not align with the specific capital needs of many small businesses. To bridge this gap, mission-driven lenders such as Community Development Financial Institutions (CDFIs) step in to provide tailored solutions. CDFIs are dedicated to addressing the unique financial needs of small businesses which support growth and economic development.

Traditional banks invest heavily in technology systems to support their lending and improve efficiency. However, CDFIs do not have the same resources to keep pace, impacting their ability to reach and lend to small businesses. Public and philanthropic funding can make the difference in enabling CDFIs to make the critical investments in technology enabling them to serve the needs of communities in which they operate. 

CRF, an early innovator and national CDFI, recognized an opportunity for technology to address the challenge of how small businesses access affordable capital. CRF developed a technology-enabled tool, CRF Connect, that dramatically simplifies and streamlines the path of connecting small businesses with the capital and resources they need. To achieve meaningful scale, the technology required partnerships—partners who understood challenges faced by small business, were committed to finding solutions and that were willing to invest in the ongoing development and evolution of the technology platform. We found two of those partners in Mastercard Strive USA and JPMorgan Chase along with more than 160 mission-aligned CDFI and business support organizations.

Connecting Small Businesses to Capital and Resources: CRF Connect

CRF Connect, used initially in second-look bank referral programs, has had a dramatic and positive impact on how small businesses access capital. The tool has been utilized as the front door matching and pre-qualification application for small businesses in multiple pandemic recovery funds, the State Small Business Credit Initiative (SSBCI) from the U.S. Department of the Treasury, and other public/private loan programs, allowing small businesses to seamlessly connect with a network of mission-driven CDFI lenders and business support organizations based on their unique needs.

The success of CRF Connect inspired us to partner with Mastercard Strive USA and JPMorgan Chase to broaden our innovative collaboration and address other pain points faced by small businesses, CDFIs, and other stakeholders working to support them. Together, we explored how technology could tackle these challenges and what it would take to develop tools to amplify the scale and effectiveness of the small business ecosystem.

While there is a long list of challenges, improving operational efficiencies for program sponsors and CDFI lenders emerged as a top priority. This includes streamlining program administration as well as enhancing the ability for lenders and technical assistance providers to uncover, address, and support the financial health of the small businesses in their portfolios. To address these issues, CRF, along with the support from Mastercard Strive USA and JPMorgan Chase, developed and launched two additional technologies: CRF Exchange and CRF Insights.

Processing and Administration: CRF Exchange

CRF identified several inefficiencies in the administration of capital programs, such as enrolling loans or other types of financial support or credit enhancement into a program, calculating capital flows between lenders and programs, organizing document repositories, maintaining archival records, access to real-time reporting, and making these processes seamless for participating lenders. With input and support from Mastercard Strive USA and JPMorgan Chase, CRF developed the CRF Exchange tool to address these challenges. CRF Exchange facilitates efficient program administration for both sponsors and participating lenders, ensuring smoother operations across all stages of program engagement. Today, CRF Exchange is utilized in numerous loan and capital support programs nationwide.

Improving Support for Small Business Lenders and Resource Providers: CRF Insights

Small business service providers can enhance their impact by focusing on direct support and gathering insights to help develop tailored advisory services to better position their clients for success, To aid this, CRF launched CRF Insights, an open-banking-enabled tool that empowers business support providers to assess the financial health of small businesses, identify potential growth challenges, and track key financial trends over time providing a clearer picture of long-term business success. By proactively engaging with clients and offering individualized coaching and support, these organizations can help enhance small businesses’ access to capital.

As a result of our innovative collaboration with Mastercard Strive USA and JPMorgan Chase, CRF now has a suite of three software tools designed to support the small business lending ecosystem. The CRF technology platform has served as the backbone of 12 recovery funds in 27 states, funded over $600 million to more than 9,700 small businesses, and established a network of 163 partners (and growing), along with the support and expertise of local business support organizations.

Advancing the Capabilities of Our Technology Solutions

Now, we’re aiming even higher. With the support and collaboration of Mastercard Strive USA and JPMorgan Chase, CRF will be working to further advance the capabilities of our technology solutions and drive more widespread use among the small business ecosystem, including mission-aligned CDFIs, business support organizations, and small businesses.

“We believe that technology has the potential to be a gamechanger for small business ecosystems across the country,” said CRF’s Patrick Davis, SVP of Platform and Tech Services. “With these investments from JPMorgan Chase and Mastercard, our goal over the next three years is to scale all three technology solutions – CRF Connect, CRF Exchange, and CRF Insights – that have a demonstrated track record expanding access to credit and support services for small businesses across the country. CRF will continue to innovate by raising philanthropic funds to support our research and development efforts. Our technology platform will also transition from a single point-in-time interaction with a small business to a continuous data-driven recommendation engine that leverages all three products to deliver the right resources at the right time over the course of the business’ maturation and scale.”

For CRF, the decision to collaborate with both funders comes down to capitalizing on each funder’s strengths and growing our efforts to move the small business lending needle farther and faster. Mastercard’s expertise and support can increase access to new sources of capital and liquidity for CRF and help us to make core infrastructure enhancements that ensure the ongoing performance and scalability of our platforms. With support from JPMorgan Chase, we stand to increase the ways in which small businesses interact with, and benefit from, a network of CRF partners and establish a new standard for outcome-based impact measurement and accountability among stakeholders.

“JPMC’s philanthropic partnership with Mastercard represents an exciting opportunity to jointly break down access to capital and resource barriers for small businesses by supporting the continued development of CRF’s technology solutions,” said Shaolee Sen, head of global small business philanthropy at JPMorgan Chase. “This work will power economic growth by enabling CDFIs to serve more small businesses and better track impact outcomes.” “A strategic collaboration with JPMorgan Chase and Mastercard allowed us to comprehensively invest in scaling CRF’s vision and impact more than we could have alone” said Sandy Fernandez, vice president for social impact for North America at the Mastercard Center for Inclusive Growth. “This work will build sustainable community finance infrastructure in communities across the country.”