Frequently Asked Questions
Q: Describe the background of CRF and what it can do for my community.
A: CRF is a national nonprofit organization that has brought capital to community development lenders in low- to moderate-income communities since 1988. We pioneered financial techniques that help lenders obtain funds from private sources that they could not access on their own. Our clients include cities, towns, states, Indian tribes, and other government organizations, as well as nonprofit community development organizations. By buying these loans, we help recycle scarce capital, which helps these local lenders speed up the process of revitalizing their communities.
Q: Does CRF operate near me?
A: CRF operates nationally. Click here to see a map of the cities where community-development lenders have conducted transactions with CRF.
Q: Is CRF a government-sponsored program?
A: No, CRF is not connected to any governmental body nor is it a quasi-governmental organization. CRF is a private nonprofit organization that earns revenue primarily by conducting transactions with community-development lenders. Secondarily, it receives support from foundations, corporations, and accredited individuals who want to make social-purpose investments in a way that maximizes their effectiveness.
Q: How can CRF help with my financial needs?
A: In exchange for loan assets, CRF can provide you with cash to continue or expand your lending activities. We usually can provide you funds in 90 days or less from the time we begin a transaction, depending on transaction size and complexity.
Q: How does CRF work?
A: We make use of community development loans as assets, pledging them to private investors and providing community development lenders the cash. We can either buy your existing loans or agree to buy future loans made under mutually agreed-upon guidelines.
Q: What about servicing the loans?
A: Community development lenders can continue to service the loans they made or assign them to our loan servicing staff. We offer a full range of loan-servicing features and can divide the duties with you if need be, so you retain borrower contact while avoiding some of the administrative duties.
Q: What sort of loans will you purchase?
A: We buy existing or future asset-secured business loans, commercial and residential real-estate loans, and community facilities loans. Maximum acceptable loan terms depend on the loan type. Any interest rate is acceptable, but the cash provided depends on interest rate. Balloon payments are acceptable. We will consider purchasing loan portfolios totaling as little as $100,000. More information on such programs can be found on this Website under Products and Services.
Q: What sort of loans are NOT suitable for CRF to purchase?
A: We do not buy loans made for reasons other than socially beneficial purposes, nor do we buy personal loans, farm loans, revolving lines of credit or automobile loans.
Q: How can I receive pricing information about my loan?
A: We can give you a price estimate for your existing loans within one week. Contact us for a loan-value form. All we ask is for a loan's original balance, current balance, interest rate, payment amount, payment frequency and maturity date. For other transactions, such as advance commitments, structured financing or loans to lending organizations, we can provide a general proposal in less than a week. All estimates are free of charge.
Q: How is the value of my loan calculated?
A: We determine the value of a loan by pricing it relative to the market. The term, security, lien position and interest rate of the original loan determine what it is worth. We sell the loans that we buy to institutional investors, so loans that are priced above market earn a premium. Loans that are priced below market earn a discount. Our goal is to provide lenders a fair price while earning enough to cover our cost of doing business. Most lenders are surprised at the value they receive for their loans and are pleased to have the option of continuing servicing the loans as a means of creating ongoing revenue. When the loans are priced too far below market to meet lender needs, we have alternative ways to recapitalize.
Q: I've only had my loan for six months. Is it too soon for you to purchase?
A: Typically, a loan will have had to been paid on time and as promised for at least 12 months before we will buy it. However, we are increasingly entering into agreements with organizations under which we buy loans as they are originated. Please contact CRF to discuss your individual situation.
Q: How does CRF make money?
A: We generate revenue from our transactions to cover our cost of doing business. We sell the loans we buy to institutional investors. Charitable contributors--including foundations, insurance companies, banks and pension funds--have helped us build a capital base that we use to acquire loans and protect against losses.
Q: Why can't lenders just sell the loans themselves to the institutional investors?
A: It's really just a question of scale and efficiency. Very large organizations could sell their loans directly or even issue their own bonds. But for most nonprofit lenders and government agencies, such transactions wouldn't be worth the time and resources. The legal work alone makes it very difficult to any but the largest organizations to sell loans on their own. An additional issue is the unique staff skills needed to complete the transactions.
Q: How can I get a grant from CRF?
A: As a nonprofit, we seek grants ourselves to carry out our work. Because of our name, people sometimes assume we provide grants, but we're not a grant-making organization. Our method of providing capital is through purchasing loans made by community development lenders in return for cash.