Checklist

Steps to establish a Special Purpose Credit Program:

1. Define the class(es) of borrowers you plan to target with your program.
2. Compile research to demonstrate why the targeted class of borrowers has a need for the program. Refer to resources available on this page for available research that might be useful.)
3. Gain alignment with internal stakeholders on key elements of the program such as:
   • Credit criteria and/or pricing parameters, taking into account both the organization’s risk appetite and the desired impact on access and approval rates for the targeted audience
   • Capitalization (e.g., Will a unique pool of funds be allocated to the program? Will it be capitalized with existing assets or is a new source of capital required?) Key measures of success and a plan for monitoring; examples could include, but are not limited to, the number of applications received, approval rates, loss rates, impact on borrowers such as growth in business revenues, etc.
   • Duration of the program and/or timeframe within which the program will be evaluated for modification, extension or discontinuation. While there is no established best practice, consider establishing a duration that is long enough to measure impact, balanced with the ability to re-evaluate in a timely way if the program is not having the desired impact or is not meeting expected targets.
4. Document all of the above in a written plan.
5. Engage with your prudential regulator and the Consumer Financial Protection Bureau (the CFPB has oversight of the applicable regulation) to review and obtain feedback on your proposed plan. (Note: Regulators will not formally approve or disapprove of a lender’s SPCP plan, but may offer informal feedback; this early engagement will enable your organization to identify and address potential supervisory concerns.)
6. Create a go-to-market plan that includes:

• Technical development if required to enable processing and underwriting of credit applications under the modified criteria
• Updating relevant policies and procedures within your organization, including marketing, sales processes, underwriting, reporting and operational processes
• Training for staff including objectives and benefits of the program; talking points for the sales organization; any changes to process for sales and back-office staff; etc.
• How the program will be promoted to drive awareness among the targeted audience, potentially including partnership with community organizations that work with borrowers who could benefit from the program
• Key performance metrics and a plan for monitoring to ensure the program delivers the intended benefit to the targeted audience and meets any other program targets that have been established