Projects
Innovations for Underwriting Small Businesses
Overview
In 2023, FinRegLab launched a project investigating ways to improve credit access for underserved small businesses through the use of non-traditional data sources and the growth of community development financial institutions and other mission-based lenders in the wake of the COVID-19 pandemic.
The project included several components: a market landscape report assessing the state of small business lending post-pandemic, an empirical analysis of the impacts of adding cash-flow information to owners’ personal credit scores based on fintech loan data, and an implementation analysis based on five CDFI pilot programs and extensive interviews focused on recent initiatives by mission-based lenders to use electronic cash-flow data and technology to help scale their small business lending programs.
FinRegLab is continuing to work with Emmanuel Yimfor of Columbia University on empirical analyses of loan performance data from the mission-based pilot programs. This project is the first in a series of initiatives focused on assessing ways that data and technology can facilitate access to credit and other financial services to drive growth and resilience among small businesses, which create two out of every three net new jobs in the U.S. and can be a critical path for wealth-building in low-income communities.
Related Publications
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Transforming Small Business Credit: Technology and Data Adoption in Mission-Based Lending
This report details the experiences of mission-based lenders such as community development financial institutions (CDFIs) and minority depository institutions (MDIs) as they adopt electronic bank account data and lending platforms to increase lending to minority-owned businesses and other underserved entrepreneurs. The paper provides both a practical snapshot of how lenders manage data and technology adoption…
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Sharpening the Focus: Using Cash-Flow Data to Underwrite Financially Constrained Businesses
This empirical paper analyzes the impacts on predictive accuracy and credit access of incorporating electronic cash-flow data into small business underwriting models using data from two fintech lenders that lend to a broad spectrum of customers. The research was conducted in collaboration with Sabrina T. Howell and Siena Matsumoto at the New York University Stern…
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From Crisis to Opportunity: Financing for Underserved Small Businesses Since COVID-19
This report delves into the evolving landscape of small business lending following the pandemic, identifying significant trends that are shaping the lending ecosystem. As the economy improves, lenders will face critical decisions about how to meet the capital needs of more small businesses, including record numbers of minority- and women-owned startups since 2020.
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Technology Solutions for PPP and Beyond
This Research Brief catalogues uses of new data and technologies to make it easier for small businesses to access federal Paycheck Protection Program (PPP) funds and other forms of credit. Solving PPP enrollment challenges is important to laying the foundation for a rapid and inclusive recovery and to building a more resilient small business sector…
With Support From:
This research initiative was funded by a grant from the U.S. Department of Commerce, Minority Business Development Agency, and support from Visa. In addition, Plaid provided account connectivity services to the pilot programs by mission-based lenders to allow loan applicants to authorize their account data to be accessed for underwriting.
Contact Us
FinRegLab, 1701 K ST NW, Suite 1150, Washington, DC 20006
1 (202) 951-4088 / contact@finreglab.org
Kelly Thompson Cochran
Prior to joining FinRegLab, Kelly served as the Assistant Director for Regulations at the Consumer Financial Protection Bureau from 2012 to 2019, where she oversaw rulemaking, guidance, and regulatory implementation activities under various federal consumer financial laws. Kelly previously worked at the U.S. Treasury Department, the Office of the Comptroller of the Currency, and at a top 50 law firm, where she advised financial institutions on a wide range of legal and regulatory matters. She also conducted research on financial services innovation at the University of North Carolina at Chapel Hill. She currently serves on the Conference of State Bank Supervisors’ Advisory Committee on Artificial Intelligence.
Karla Renschler
As Director of Small Business Research, Karla designs and leads FinRegLab’s initiatives to explore innovations in lending to small businesses with the goal of increasing access to financial services. She brings extensive experience as a researcher across non-profit, management consulting and private sector roles. Prior to joining FinRegLab, Karla worked in small business card lending at Capital One designing credit policies and products tailored to the needs of subprime small business owners and startups. She is passionate about the role of technology in closing gaps in the small business financial ecosystem and has first-hand knowledge of the challenges banks and other lenders face in implementing innovations in underwriting. Karla holds a bachelor’s degree in political science and global studies from UCLA.
Paula Ochiel
Paula is a Senior Research Analyst who focuses on small business research projects and other initiatives. Her recent work has focused on data and technology adoption among mission-driven financial institutions to increase small business access to capital. Prior to joining FinRegLab, Paula served as an Impact Manager at ICA, a non-profit venture capital Community Development Financial Institution (CDFI) based in Oakland, California. In this role, she oversaw data collection, analysis, and reporting activities, and helped inform and develop the organization’s impact measurement strategy and research practice. Additionally, she advised collaborative initiatives aimed at improving data quality, standardization, and aggregation across the CDFI industry. Paula holds a bachelor’s degree in international studies and a master’s in development practice from the University of California, Berkeley.
About FinRegLab
FinRegLab is an independent, nonprofit organization that conducts research and experiments with new technologies and data to drive the financial sector toward a safe and responsible marketplace. The organization also facilitates discourse across the financial ecosystem to inform public policy and market practices. To receive periodic updates on the latest research, subscribe to FRL’s newsletter and visit www.finreglab.org. Follow FinRegLab on LinkedIn.
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