Based out of Huntsville, Alabama, Neighborhood Concepts is a community development financial institution that has consistently endeavored to build stronger communities. Their formation dates all the way back to 1988, in response to a lawsuit filed by residents of a public housing community scheduled for demolition. They fought hard for their community and were able to build a modern apartment community in the place of WWII-era cinder block housing. Ever since then, NCI has continued to put the community first and has been able to facilitate multiple layers of financing for those in need.
In this case study, we are shining the spotlight on the impact that this determined, compassionate and community-centric organization has had in its efforts to serve its community. Read on to learn more about their services, their challenges, and how they are leveraging technology to accelerate their lending processes and improve their capacity to serve.
Back in 2008, the Food Bank of North Alabama asked NCI to serve as a turnkey developer for a workers’ cooperative grocery store that they were planning in a high-poverty food desert in Huntsville. NCI, at the time, had extensive real estate development experience in the multifamily sector and didn't have much experience in commercial development. However, they rose up to the occasion because it was needed for the greater benefit of their community. After some strategic discussions, the board of directors came to the realization that neighborhoods need more than just affordable housing to thrive; they need access to economic opportunity as well. NCI’s mission was revised and they embarked upon a journey to develop the grocery store. The timing, 2008/2009, couldn’t have been worse with the country facing the worst economic downturn since the Great Depression.
At first, they were unable to secure traditional construction and permanent financing for the development and started exploring alternative means to get the store built. One of those alternatives was a CDFI or Community Development Financial Institution, a Treasury-certified company offering consumer banking services or small business financing. Unfortunately, there were very few CDFIs offering financing for Alabama projects and none based within the State. Recognizing that NCI could have a larger impact if they became certified as a CDFI, the board began exploring the feasibility of doing so. Once they had determined that this was a niche they could fill, the Food Bank granted NCI $300,000 as initial lending capital, followed by another $250,000 from the City of Huntsville. With that, they launched the North Alabama Revolving Fund (NARLF), and entered small business financing.
The team made their first loan in 2013; $7,500 for a local food truck expansion. Two years later, in 2015, NARLF received its certification as a Community Development Financial Institution (CDFI) from U.S. Treasury, becoming the first locally-based CDFI small business revolving loan fund in the State of Alabama. They are on track to close $4.2 million in small business loans in 2022 and end the year with $7.5 million in our portfolio.
The pandemic exacerbated the technology gaps and disrupted operations for most companies. Like many others, NCI scrambled to make sure that all members of their team had the appropriate technology to work remotely and that team members were staying connected. Fortunately, they had already shifted from a server to a cloud-hosted system a few months earlier, so at least they had some of the infrastructure in place.
What became especially challenging for NCI was finding a way to maintain security around their clients' personal financial information and that this sensitive data didn't get compromised in any way now that the staff were be using their home networks to connect and continue working.
Their other main challenge was having to come up with creative ways of ensuring they remained available to their clients. They had to enlist someone to be in the office to get the mail and be available if a client needed to come in to make a payment. With 5 people on staff and 5 days in the work week, they came up with a solution that was pretty simple and fair to the staff. Everyone had one “in-office” day and sensitive client information such as credit pulls was only initiated by someone in the office.
Moving loan applications online was another step they had to take right away. As they were trying to create greater access to capital for small businesses in north Alabama, particularly those owned by people of color or low-income entrepreneurs. During the COVID lockdowns, it became evident that they needed an online loan application to ensure that entrepreneurs in their community could easily navigate the loan application process.
As NCI's housing portfolio continued to grow, their team was spending an increasing amount of time on asset management, which left them little time to strategize and plan ahead. Although they felt that they had a good system in place, it still required a fair bit of manual entry on the part of their asset managers. At this point, they strongly felt that they needed to create a more efficient means of risk rating these properties and reporting back to the board of directors and investors.
We had an in-depth conversation with Mary Ellen Judah, Executive Director of NCI, on why she chose to adopt our solution and what makes us standout from the other solutions they have explored. Following are direct excerpts from her response:
"What we are finding with Builders Patch is that the platform has so many more applications that are creating greater efficiencies for our lending staff, including the ability for anyone on our team to access the loan file; share application materials with our contract underwriter, provide our Loan Committee access to an electronic copy of the credit memo and to better support ongoing portfolio management."
Mary Ellen Judah, Executive Director of NCI
Like many other organizations, NCI faced several staffing transitions during 2020 and 2021. Over the past year and a half, they have built back a tremendous team but most of the new employees are all fairly new to the business. Mary Ellen found herself spending a good bit of her time helping set up systems or processes to help the new team be more efficient. All the while, she was having to balance the training work with her role as Executive Director and her duties as the primary team member focused on new housing development opportunities. She was certain that there had to be a way that they could streamline some of those processes to allow the team to focus on growing into their roles.
According to Mary Ellen, there were several factors that set Builders Patch aside from other solutions that they had explored. She was initially very impressed with the Builders Patch team and their commitment to helping developers do better work. When she took a first look at the platform during the demo, she immediately saw the benefits that it would bring to their organization and was 'blown away by the can-do attitude of the team'.
"Any question I had about what could be done was answered either by showing me how that application was already built into the program, suggestions for how the system could produce the same result I was looking for, or an indication that it could easily be built into the platform. Finally, I felt that the pricing was reasonable and liked that we wouldn’t have to purchase a subscription for each member of our team."
Mary Ellen Judah, Executive Director of NCI
After a short series of demos and discussions, NCI was convinced that Builders Patch was the right software for their organization. At a stage when the senior staff is focusing on legacy planning, having a tool like Builders Patch allows the senior members to quickly train new recruits and have them set up for their respective roles. The easy-to-understand and easy-to-use aspect of the Builders Patch platform makes it convenient for new users to get the hang of the platform in a couple of days. This allows senior staff to both pass on their institutional knowledge and also save precious time which would have been spent training new employees for days.
As a non-profit, it was important for NCI to balance cost vs. benefit, recognizing that if they wanted to achieve their strategic goals, then they need to invest in the appropriate infrastructure. The NCI senior staff and the board felt that Builders Patch offered an excellent return on their investment and had great value for the organization. Fortunately, they were blessed to have corporate partners who wanted to help their strategic growth through financial contributions for infrastructure.
Shortly after NCI decided to sign on with Builders Patch, they received a note from both PNC Bank and Regions Bank, offering them philanthropic funds remaining in their 2022 budgets. Mary Ellen told the banks about her plans to use the fund for Builders Patch and received a green light from both the banks who were more than happy to support this new partnership. A week or two later, Enterprise Community Investments, who are investors on a couple of NCI's tax credit developments, also reached out to them to offer funding and support for any projects that might be relevant.
Collectively, NCI secured contributions from PNC, Regions and Enterprise that will cover the initial set-up costs as well as the first year’s subscription for Builders Patch. Good corporate partners are a key element in a non-profit’s success and PNC, Regions and Enterprise all have strong commitments to the communities in which they operate.
The entire team at NCI is looking forward to the efficiencies that Builders Patch will bring to their work: freeing their team members to focus on continued business development and strategic growth. The platform would also make the loan application process more user-friendly for their clients and more accessible to underserved small businesses and entrepreneurs. Finally, the team believes that this tool's addition further demonstrates their capacity to potential funders and investors, and supports their conviction that a non-profit must be able to show its supporters that they are good stewards of their investment.