# Community Development Financial Institution (CDFI) Underwriting

#### CNote uses technology to empower investors to underwrite CDFIs more rapidly and effectively with better risk controls than ever before.

###### Why CNote is focused on CDFIs

## CNote Makes It Easy To Invest in CDFIs

CDFIs have a long history of delivering deep community impact and bringing resources and economic opportunity to underserved communities.

- Every CDFI shares a common goal of expanding economic opportunity in low-income communities by providing access to financial products and services.
- They are federally certified by the CDFI Fund, an agency within the U.S. Department of Treasury.
- Historically, investing in CDFIs was difficult and limited to sophisticated investors or to individual CDFIs on a case by case basis.
- With CNote, investors of all sizes can deploy capital into communities through a diverse pool of CDFIs with ease.

###### Using technology to democratize access

## The Challenge: Unlocking CDFIs

The underwriting process for CDFIs has been historically manual, time-intensive, and expensive. This means that most investors are only working with a small subset (2% or less) of the CDFI Industry. Why?

- Underwriting a single CDFI is a time and resource-intensive process that can cost hundreds of hours in contractor or employee time.
- The average institutional time to underwrite and then invest in a CDFI is often 6 months or more.
- Data acquisition has remained manual, meaning a large amount of time must be spent collecting data and gathering inputs before analysis can even begin.
- CDFIs are idiosyncratic — the ability to underwrite other asset classes may not readily transfer to the CDFI market.
- Subjective and relationship-driven CDFI underwriting can also increase bias and lead to less-informed underwriting decisions.

###### What We Do

## The Solution: CNote Underwriting Technology

The technology CNote has developed makes every phase of the CDFI investment and evaluation process more reliable, transparent, and seamless for both CDFIs and their investors.

- CNote’s technology greatly reduces the cost and time of connecting investors and CDFIs.
- Data acquisition, validation, and underwriting are streamlined automatically through CNote’s diligence engine.
- CNote’s data collection framework is designed in collaboration with CDFIs to make the underwriting process less onerous for these resource-limited organizations.
- CNote continuous data monitoring capabilities allow investors to regularly evaluate portfolio health.
- CNote’s technology helps to reduce bias and fairly capture the risk related to smaller CDFIs and those led by people of color.

## CNote CDFI Technology Use Cases

### Rapid Deployment

A community foundation uses CNote technology to reduce investment time from 6-months to three weeks.

### Increasing Reach

A family office leverages CNote’s underwriting capabilities to expand its CDFI portfolio to include more geographic diversity and add CDFIs led by people of color.

### Improved Underwriting

An institutional investor improves their risk underwriting by deploying their customized risk metrics and ratios on top of CNote’s already robust criteria.

## Learn More About CNote’s CDFI Diligence and Underwriting Capabilities