2015 FIR Summary

Over the past fifteen years, the Financial Innovations Roundtable (FIR), located at the Carsey School of Public Policy at the University of New Hampshire and hosted by the Division of Consumer and Community Affairs at the Federal Reserve Board, has worked with a range of community development and other types of financial institutions, government agencies, foundations and trade associations to address and solve problems related to access to capital for low-and moderate-income consumers and communities. The FIR does this by tapping the expertise of thought leaders from the institutional investment, banking, philanthropic, and community development industries.

The 2015 Financial Innovations Roundtable focused on how innovations in small business lending can be harnessed to better serve small business borrowers and enhance community and economic development. In the wake of the financial crisis and recession, both online and mission-driven lenders have stepped in to fill some of the gap created by the banking sector’s retrenchment from the small business lending market. Some of these institutions are not new – both small and microbusiness CDFI lenders, and the merchant cash advance providers, have been around for more than fifteen years. What are new are their moves to incorporate technology (and particularly online tools) into their business practices. Other institutions – such as Peer-to-Peer (P2P)/marketplace lenders, or unregulated balance sheet lenders – are new disruptors, using technology to bring new investors to the lending marketplace, as well as to dramatically cut costs, and approve and fund loans much faster than banks or microlenders ever have.

As we work to solve the credit crunch that continues to affect our nation’s small businesses, it seems there might be opportunities for each of these three types of lenders to learn from, or collaborate with, each other.

What partnerships and initiatives can be undertaken, with whom, and how? The 2015 FIR brought together representatives from banks, community development finance, and small business online lenders to talk about opportunities for collaboration as well as the challenges of scaling up small business lending using technology.