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RFP: Credit Risk Rating System Consultant

REQUEST FOR PROPOSAL

Credit Risk Rating System and Related Policies & Procedures

Development & Implementation

REDF Impact Investing Fund (RIIF) is soliciting proposals for the development and implementation of a credit risk rating (RR) system and related loan policies and procedures.  The information in this RFP will assist you in understanding RIIF’s needs and preparing your proposal. RIIF reserves the right to reject any or all proposals. This solicitation includes the following deadlines:

Questions can be submitted until:

5 pm Pacific Standard Time – Friday, April 9, 2021

Proposal submission deadline:

5 pm Pacific Standard Time – Monday, April 12, 2021

All questions and proposals must be submitted via email to: proposals@redf-riif.org

RFP issue date:

Friday, March 12, 2021

 

Table of Contents

  1. About REDF Impact Investing Fund
  2. Detailed Specifications
  3. Proposal Submission Guidelines and Requirements
  4. Review Criteria | Desired Qualifications
  5. Contract

 

1. About REDF Impact Investing Fund

RIIF is a 501(c)(3) debt fund that provides loan capital and technical assistance to employment social enterprises (ESEs) and businesses that employ and support people overcoming barriers to employment. RIIF is administered by REDF, a venture philanthropy organization that invests exclusively in the growth and effectiveness of double bottom-line businesses dedicated to helping people who otherwise would be shut out of the workforce, get jobs, keep jobs, and build a better life.

REDF launched its Impact Lending Practice in 2017 to accelerate the growth of the field.  In 2019, RIIF was formed to provide financing for employment-focused social enterprises and businesses that employ individuals experiencing barriers such as homelessness, justice system involvement, addiction and mental health issues, youth under 25 disconnected from school or work, and survivors of domestic violence and human trafficking. With a current loan portfolio of $1.95 million and generating hundreds of employment opportunities, RIIF is demonstrating a model for how flexible loan terms combined with technical assistance can attract new sources of capital to social enterprises.  RIIF has submitted its application to receive CDFI status.

2. Detailed Specifications – Credit Risk Rating System & Related Policies & Procedures

RIIF is accepting proposals for support developing its risk rating system and related policies and procedures. Below are RIIF’s minimum needs for these services.

Overview of minimum needs             

Risk rating system vetting, development & implementation

  • Review of existing policies of RR systems by other leading CDFIs and small business lenders.
  • Present 2-3 different potential RR frameworks and the pros/cons of each, building off initial research already completed by RIIF. RIIF has already determined a good starting point and a potential “right size” framework.  Our hypothesis needs validation and to be measured against industry best practice for an organization of our size/scale.
  • Collaborate with RIIF’s finance and lending teams to understand current needs, gaps, and priorities.
  • Once RIIF selects a system based on consultant recommendations, fully develop RR framework.
  • Put together road map for implementation of new RR system and related processes.

Related policies & procedures development & implementation

  • Write related policies and/or revise existing RIIF loan policies and develop procedures to align with new RR system (ex. loan loss reserve, process of upgrading/downgrading risk rating, etc.).

 

3. Proposal Submission Guidelines and Requirements

Details for Asking Questions:

  • Questions can be submitted until 5 pm Pacific Standard Time on Friday, April 9, 2021.
  • Submit questions to proposals@redf-riif.org.
  • Questions will be answered in a timely manner.

Guidelines for Submitting a Proposal:

  • REDF will review all proposals that meet the deadline and submission criteria.
  • Proposals must be received by 5 pm Pacific Standard Time on Monday, April 12, 2021. Proposals received after that time will not be considered.
  • Proposals must be submitted to proposals@redf-riif.org. If you include a link to a file online, please make sure that it is not broken since the deadline is non-negotiable. RIIF will not allow proposals to be replaced or appended to after the deadline.
  • Please use 11 or 12 point fonts and a minimum of 1.5 line spacing. Maximum proposal length including cover letter, qualifications, proposal and budget should not exceed 5 pages excluding any attachments.
  • Proposals should be presented in a clear and logical manner.
  • Proposals should provide for all the following:
  • Consultancy profile that covers the following:
  • Core competencies
  • Length of time in business
  • Number of employees
  • Physical location of company
  • List of references (2)
  • Relevant examples of previous work (2)
    • Examples should be as close to the service requested as possible.
  • Name and resume for the individual who will serve as the primary point person (s)
  • A list of the team that will provide the services:
    • List each person’s role
    • Include a brief background summary for each team member
  • Explain how your business model relates to the scope of this RFP
  • Explain how your company meets any or all of the desired qualifications listed below
  • Vendors and/or subcontracts that will be utilized to provide service
  • Budget
  • The budget proposed must be clear and should be itemized and detailed enough to show all costs necessary to provide the specific services listed in Section II: Detailed Specifications – Credit Risk Rating System and Related Policies & Procedures.
  • RIIF anticipates that this will be a three-month engagement, so please consider this time frame in preparing the budget.
  • Identify staff you anticipate working on the services and their rates.
  • The price you quote should be comprehensive. If your typical pricing excludes certain fees or charges, you must provide a detailed list of excluded fees with a complete explanation of the nature of those fees. Further, please provide itemized pricing to the fullest extent possible. RIIF may consider modifying the scope of work based on itemized costs.
  • Sub-contractors must be identified and the work they will perform must be defined. In your proposal please provide the name, address, and EIN of the sub-contractor(s). RIIF will not refuse to review a proposal based upon the use of sub-contractors; however RIIF retains the right to refuse the sub-contractors you have selected.
  • RIIF retains the right to utilize all aspects of the solicitation process including proposals, questions, interviews, outcomes of reference checks and research.
  • Bidders will be notified via email if their proposal has been accepted for review.
  • Bidders not selected as finalists will be notified by email.
  • Bidders selected as finalists will be notified by phone and/or email.
  • Interviews with finalists will be scheduled as needed.
  • RIIF will not distribute a list of bidders, finalists or scores. That information is kept confidential and maintained for our use only in determining the source(s) that best fit our needs. Only aggregated data is provided to funders or others to whom RIIF is obligated to report.
  • RIIF retains the right to terminate the review and selection process at any point.

 

4. Selection Criteria | Desired Qualifications

Potential vendors and proposals will be evaluated on a weighted scale that considers key personnel, technical/systems approach, service level agreement, cost, ability to meet deadlines, staff engagement and communication, and other criteria consistent with RIIF’s mission and purpose. Positive efforts are made to utilize small businesses, minority-owned firms, and women’s business enterprises.  RIIF also values relationships with contractors who support nonprofits and utilize the products and/or services of social enterprises.

REDF is committed to a policy of equitable treatment and opportunity in its relations with consultants and potential consultants. REDF encourages and has a preference for proposal submissions from organizations led by and composed of individuals who are representative of the diverse communities REDF serves that have experienced barriers to employment, as outlined in Section 1.   Please note that we have alternatives specifically for small firms that are led by and composed of individuals who are representative of the diverse communities REDF serves.  If you meet this criterion and are unable to submit a full proposal response, but still want to be considered for this project, please reach out to us at proposals@redf-riif.org.

The following questions related to demographics and identity are optional.  If you chose to include these responses, please incorporate them into your proposal:

Do you or your team share similar lived experiences with our target populations (i.e. barriered groups) as outlined in section 1 ?

What percentage of your team self-identifies as a person of color?

What percentages of your team self-identifies as male, female, gender non-conforming, or non-binary?

Desired qualifications

  • Prior experience working with non-traditional credit rating systems and alternative credit scoring methodologies that is inclusive of working with borrowers that are led by people of color and/or people with lived experience from RIIF’s target populations.
  • Prior experience blending best practices from traditional RR systems (based on aspects of the 5Cs of Credit) with alternative RR systems that are more equitable and inclusive and that shift the narrative on risk by ascribing value to the forms of capital and assets that POC and/or lived experience-led organizations uniquely bring.
  • Relevant and deep experience working at a CDFI or at a supporting organization such as Opportunity Finance Network or the CDFI Fund.
  • Prior experiencing designing written policies & procedures for a small business lender or CDFI.
  • Prior experience developing risk rating systems for a small business lender or CDFI.
  • Direct lending experience in small business finance or community development finance.
  • Direct experience with underwriting, business and operational risk assessment and mitigation, and portfolio management.
  • Formal credit training experience.
  • Demonstrated ability to prepare clear, accurate well-organized written policies and procedures.
  • Knowledge of and/or interest in Diversity, Equity and Inclusion best practices, and in applying a DEI lens to our credit policies & procedures.

5. Contract Terms

REDF anticipates awarding a three-month contract for this project.  Deliverables will include:

  • Phase I: Present 2-3 options of RR systems with pros/cons.  Make recommendation of RR system to adopt, taking into account RIIF’s size, scale, and initial hypothesis.
  • Phase II:
    • Once RIIF team has agreed to the system, build out RR system and framework in its entirety.
    • Develop related policies & procedures.
    • Advise on implementation and any IT or software considerations.

Provisions of this RFP and the contents of the successful responses are considered available for inclusion in final contractual obligations. A vendor will be selected following established procedures at RIIF. Once the vendor is selected, the contract will be handled by REDF’s Grants, Contracts & Compliance Administrator. The services will commence upon full execution of a legally binding agreement between RIIF and the selected vendor. The agreement will outline the terms, scope of work, budget, period and other necessary items.