The Murdock Trust invests in capacity-building projects at nonprofit organizations across the Pacific Northwest. When one grant helps create new opportunities and increase the impact of a nonprofit’s work down the line, we call it the ripple effect. The Stories of Impact series on our website is intended to help shed light on the outcomes driven by some of the outstanding organizations the Murdock Trust has been fortunate to support in recent years.
A restaurant owner in Livingston, MT, lost sleep for months during COVID. Without enough assets, no bank was going to invest in his business, because restaurants are a notoriously risky industry to fund. Then, Ralph got connected with MoFi, a nonprofit designed to help people like him. Within three days, the money he needed was in his bank account. The restaurant was going to survive.
“For me, it was one of the first good night’s sleep in months,” he said. “We knew we were going to make it.”
If this same restaurant owner had applied for this funding in 2019, it might have taken months to arrive in his bank account. But thanks to MoFi’s commitment to their clients, a grant from the Murdock Trust and other donors have enabled MoFi to implement new technology that has tripled its lending capacity and decreased processing time from up to 4 months to as little as 3 days.
Investing in Entrepreneurs
MoFi is a nonprofit Community Development Financial Institution (CDFI) whose mission is to provide financing and business consulting that transforms lives and communities across Montana, Idaho, Wyoming, Utah, Eastern Washington, and Eastern Oregon.
“What that really means,” says Heidi DeArment, vice president and CFO of MoFi, “is that we help people start and grow businesses. And the people that we help tend to be low income, or from some sort of disadvantaged population that is having a hard time accessing bank financing.”
Since its founding in 1986, MoFi has been committed to walking with their clients through what can feel like a daunting financial process. MoFi supports the businesses considered risky for banks, such as restaurants, retail, and individual sole proprietors. Because most banks require 24 months of being in business in order to get funding, emerging business owners or those without assets struggle to hear “yes” from the bank initially. That means thousands of smart, driven people are denied the opportunity to build their own economic security. That’s where MoFi comes in, providing financial support and business advice to emerging or struggling entrepreneurs.
The problem, until new technology saved the day, was that predatory lenders could offer these entrepreneurs enticing loans with much quicker delivery dates than MoFi. It was hard to compete with loans that promised funds in days (with hidden devastating consequences), when MoFi’s system took months to process. MoFi knew what it needed – a new technology system – it just needed the funds to get there.
Investing in Technology
In 2020, MoFi applied for a grant from the Murdock Trust to support the purchase of nCino, a platform that automizes the loan intake process for clients. Previously, like other CDFIs, MoFi had no centralized place for applicants to track progress, upload files, and get quick answers. Instead, it was a laborious process that needed MoFi staff to input basic client info as many as six times, manually enter tax numbers from PDFs, and communicate with clients via phone calls and emails. This process could take up to four months, leaving clients exhausted and tempted to turn to predatory lenders while they waited.
Now, thanks to this technology upgrade, the process is automated, secure, and fast. After a client is denied a loan at a bank, the banker can direct them to a brief survey that automatically calculates if they are eligible for a MoFi loan. Within minutes, the client can scan the necessary documents, which nCino uploads and organizes so that, the next morning, a MoFi staff member sees a nearly complete application. The client can have the money in their bank account within days – no time to be tempted by less trusted lenders or even feel discouraged at the bank’s rejection.
An Impactful Return on Investment
“There have been few things in the past fifteen years that have been more transformative at MoFi,” said Heidi of these technology upgrades.
Since implementing nCino, MoFi has tripled its lending capacity despite no increase in staff size, now helping more than 300 small business owners annually. Client satisfaction of the interface has gone from 2 to 9. Banker confidence in MoFi as a partner has dramatically increased, and other CDFIs across the nation are following MoFi’s example and implementing new loan intake platforms.
This technology has also transformed MoFi’s ability to connect with new clients, particularly those who don’t typically turn to banks.
“We were really built on a business model of visiting bankers, so when people go to the bank and get denied, they come to us,” describes Heidi. “But that left out a big slew of people that don’t go to the bank, and that tends to be Native American borrowers, Hispanic borrowers, women, and veterans sometimes.”
nCino allowed MoFi to implement SMS and cell phone technology that could reach a broader audience and remove barriers, such as having access to a computer. With nCino’s increased efficiency, MoFi staff are also now freed up to connect with community leaders and establish relationships with local churches, chambers of commerce, and people of influence, all of which have grown their reach in underserved communities. Before nCino, only 6% of MoFi clients were people of color. Now, 33% are Hispanic alone.
“The technology changed our ability to go deeper into communities,” said Heidi. “It worked. We knew it was going to work, but we really didn’t have the tech or the resources to service those communities. Now we do.”
An Eye for Transformation
Because of nCino’s success, Heidi said every aspect of MoFi’s work is now seen through a new lens of potential improvement.
“Now in everything we do, the team is like, ‘This could be better. This could be more efficient,’” said Heidi. “What’s possible in the future has really changed in our minds because of the success around nCino.”
As a capacity-building funder committed to continuous improvement, the Murdock Trust could not be more thrilled at the way MoFi’s investments in technology have caused ripple effects of tripled capacity, greater community investment, and new creative thinking. Organizations like MoFi that are rooted in its community and meeting the needs of constituents are the heartbeat of the Murdock Trust. We are honored to be their partner, as they partner with the vital small businesses that help make Pacific Northwest communities thrive.