Frequently Asked Questions
CNote is an investment product that allows you to earn more on your idle cash while supporting financially-underserved communities across America. Some consumers may think of CNote as a more liquid, social impact CD, where you earn a similar rate of return to a multi-year CD with only a quarterly commitment—all while doing good. We’ve also leveraged technology to make your investment in CNote safer and easier to manage. The one important caveat is that CNote is not risk-free, so while our partners have never lost an investor dollar, there is some risk inherent in an investment in CNote. In finance-speak, CNote is a medium-term savings alternative.
CNote currently pays 2.75% (users can earn up to 3.0% by referring new users) on all invested capital. The below chart illustrates the return of CNote versus keeping your money invested in a low-yield traditional savings account.
*Expected earnings via traditional banks are calculated based on a national average rate listed by FDIC (Source: https://www.fdic.gov/regulations/resources/rates). Expected earnings for CNote are calculated using a projected 2.75% yield. Expected earnings are presented for comparison purposes only and are not a promise of future results. This graph is for illustration purposes only and is not a representation, warranty, or guarantee of future investment performance. Note that CNote is not FDIC insured. Future rates may be different. You should not rely on this graph in and of itself to make any investment decisions.
The way we generate this competitive return is by doing what banks do—investing your money. But instead of using your money to fund credit cards and mortgages (as banks do), we invest 100% of your savings into federally-certified community lenders. We make money as those community loans are paid back, but instead of keeping most of the profits for ourselves (what banks do) we return the majority of the money to you, the CNote customer.
So to recap, this is how it works:
- You invest with CNote.
- We invest 100% of your savings into top-performing community lenders who have decades-long track records of repaying all of their investors in full.
- Those community lenders make loans to financially under-served communities including female and minority entrepreneurs and community development projects like affordable housing.
- As those loans are repaid the community lenders pay interest and principal back to CNote.
- We then pass those repayments on to you in the form of your 2.75% return, instead of keeping all the profits for CNote.
Like any innovation, A does not equal B. Lyft is not a Taxi and RedFin is not Coldwell Banker. Similarly, CNote is not a Bank. Because we are not a bank (depository institution), CNote is not eligible for FDIC coverage. That does not mean we take the safety and security of your funds any less seriously. Please visit our Safety & Performance section so you can understand what steps we have taken to safeguard your dollars – today, tomorrow, and always.
Along with being a low-risk investment option, CNote is also impact focused. CNote invests your money with community lenders who have a long track record of financial stability and are committed to supporting underserved communities and investing in women & minority entrepreneurs. Your investment helps small businesses grow, and funds community development projects like affordable housing and community centers.
That means that on top of earning more, you can feel good knowing that 100% of your money goes to support greater financial equity in this country.
CNote is not an investment advisor. We cannot advise you on where and how to allocate your funds. Please use this information for educational purposes only and consider your own situation when evaluating if CNote is right for you.
CNote was founded by two successful women who spent years working in finance. They saw that the investment industry typically favored the wealthy and connected. They also saw that it generally ignored women, minorities and the young. CNote’s goal is to change that.
We want to make financial freedom more accessible to the masses. We are doing this by creating financial products that give our customers outsized returns when compared with traditional bank savings accounts, while driving social impact. It’s a virtuous cycle, the money you invest in CNote grows underserved communities and helps fuel the real engine of growth in this country, the small business. Those success stories lead to more jobs, more income, and more money to invest with CNote.
Most new accounts are funded and earning interest within ten business days of signup. This timeline can vary because we match the capital invested by our users with the capital needs of our partner CDFIs. Once you request the transfer into your account, we aggregate it with requests from other CNote users and process them in batches. This process can take a few days, and sometimes longer if the batch occurs close to a weekend or holiday. Once we initiate a batch transfer, funds are pulled from your connected financial institution and moved to our FDIC insured holding bank for disbursement to CDFIs.
After your money is transferred into your CNote account, our algorithms pool and diversify your funds with those of other CNote clients for deployment across multiple CDFIs. Your money is then transferred to our CDFI partners and starts earning interest. It takes 6 business days from when we initiate a transfer (send a request to your host financial institution) for the funds appear in your CNote account and start earning interest.
People typically invest in CNote for two reasons, to get a better return, and because they want to invest their money in causes they care about.
Many consumers are tired of earning next to nothing on their savings accounts. For years, the yield on traditional savings accounts has hovered around 0.08% or less. CNote offers an opportunity to earn a much higher rate of return.
Additionally, CNote users typically want their dollars to have a positive social impact on communities across America. Many of our users want to build a more inclusive economy and don’t think that entrepreneurs should be denied a small business loan because of their gender, race, or the community they happen to live in. By supporting lenders that serve financially underserved communities, CNote Members know their money is building a more equal world.
The win-win of a better return and positive impact is why many of our Members keep money invested with CNote for the long haul. Nonetheless, you should evaluate your personal financial situation to decide whether investing in CNote is right for you.
CNote is not a traditional savings account. A savings account is held by banks and depository institutions which are eligible for FDIC insurance. CNote is an alternative savings product, that shares many characteristics with a savings account or CD, with some important differences
Return. Most traditional savings accounts offered by big banks pay around 0.09% or less. CNote pays 2.75% or more.
Fees. Many banks have complicated fee schedules. CNote has no fees. That’s right, we never charge any fees.
Your ability to control how your money is used. With traditional savings accounts, banks use your deposits to fund various lending activities. This means your savings could be used to fund high-interest loans like credit cards, or other projects like funding private prisons. These loans may be very profitable for the bank, but you may not agree with how your money is being used. With CNote, 100% of your money is invested in federally-certified community lenders that serve local communities across the country. These lenders give loans to female and minority entrepreneurs, fund the development of affordable housing, and support other community development projects you can be proud of.
Safety. All FDIC-insured savings accounts offer insurance up to $250,000. This means that if your FDIC-insured bank fails, the government will cover any loss up to that insured amount. CNote is not a bank so we do not rely on the FDIC insurance. BUT, the safety of your dollars is our top priority. CNote has three-layers of protection baked into your investment, but it is not fully insured. Overall, the risk of loss with CNote is considered to be low, defined by the historical performance of our community lending partners. To illustrate, not one of the lenders we invest in has ever lost a single dollar of investor money. You can read more about the Safety & Performance of CNote here. Part of the tradeoff in taking a small risk by investing with CNote is that you enjoy a better return compared to traditional savings accounts. You should consult your financial advisor and carefully consider the amount of risk you are willing to take.
Liquidity. With a traditional savings account, you can withdraw and deposit money on a daily basis. With CNote we offer quarterly liquidity. This means that if you want to withdraw money, you just need to let us know ahead of time. Why quarterly liquidity? Because CNote deploys your money with community lenders, so if you’re constantly pulling the money in and out it cannot be lent out to generate a return for you. But we understand life happens and you might need access to your funds sooner that what is prescribed. We work with our Members on a case-by-case basis to meet immediate and unexpected liquidity needs, typically with no issue. If you do need to make an unanticipated withdrawal you can email email@example.com, and we’ll do our best to meet your needs.
Social Impact. Banks are typically focused on generating returns for bank shareholders, employees, and executives. At CNote, we invest 100% of your money in community lenders who are focused on improving the economic situation in the communities they serve, and with making prudent loans to small businesses they believe will succeed. Ultimately, this means that your dollars not only generate an economic return for you (2.75% or more) but they also generate a social return for you as well. With CNote, you can see the number of jobs your money helped create, and the small businesses you’ve helped fund—you’ll have the satisfaction of knowing that your money is doing right by the world. Read our 2017 Annual Impact Report to get an idea for the kind of change your money can drive.
There is no minimum amount to open an account with CNote. You can start with $1 or $500,000.
CNote offers quarterly liquidity on up to 10% or $20,000 of your investment (whichever is larger). For most customers, this means they can withdraw their entire balance any quarter. CNote has the discretion to allow larger withdrawals as well, and we always work closely with customers to meet their needs. You can initiate withdrawal requests directly from your secure, online CNote Account.
Quarterly liquidity dates are January 1, April 1, July 1, and October 1 and we require 30 days’ notice. For example, if you want to make a withdrawal on July 1, please submit your request on or before June 1. As mentioned above, we work with our Members on a case-by-case basis to meet immediate and unexpected liquidity needs, typically with no issue. If you do need to make an unanticipated withdrawal you can email firstname.lastname@example.org and we’ll do our best to get you your money when you need it.
Here are a few additional things to note about withdrawals. When you put your dollars to work with CNote, we use those dollars to support community lending partners so that low-income communities, and often-ignored segments like women and minorities, can build their businesses. This means your money does not sit in a big grey vault where it collects dust, it’s actually loaned out to real businesses and entrepreneurs. For large account balances in excess of $200,000, there is a 10% liquidity cap, meaning you can withdraw up to 10% of your full balance in any given quarter. Just a friendly reminder that we are working with CDFIs to put those dollars to work while you sleep. Withdrawing your $1M one quarter after you put it in is neither helpful for you (little interest accrued) nor the community members we serve. At CNote, responsible investing means both transparency and access for you, and fairness to the underserved communities that are counting on all of us. Please know this policy before you sign up.
No. CNote does not charge customers any fees. Banks love fees, we don’t.
We do not charge CNote members any fees. We make money by investing your money in our partner CDFIs and retaining any funds in excess of the 2.75% return we pay to your account.
Your CNote account does not have an account number like a traditional bank. For your convenience, your login and password are your gateways to your CNote account. We provide confirmation of your investment(s) through legally-binding agreements that every user receives. We support business, nonprofit, trust, and institutional accounts as well. If you would like to open multiple accounts please contact
Yes! CNote supports trust accounts.
Yes! CNote supports business accounts
Effective May 11, 2018, new federal regulations modify how nearly all financial institutions verify business customers. You can read the official guidance on these new rules here. To comply with federal law, when you open a business account, CNote must collect the contact information for one controller and up to four beneficial owners of your business.
A controller is a single individual that has significant responsibility to control, manage, or direct the activities of the business (examples include an Executive, Senior Manager, General Partner, or President).
Beneficial owners are defined as each individual who directly or indirectly owns 25% or more of the equity interest in the business. It is possible for a business to have zero beneficial owners (example: a business owned equally by ten individuals, each with a 10% stake, would have no beneficial owners).
Accordingly, each business will have between zero and four beneficial owners and one listed controller.
Finally, if the ownership or control structure of your business changes, you should update that information in your CNote account. Any account changes will require a new verification process to clear before any new transactions can be processed.
CNote provides financial advisors and planners a simple path to access CNote as a product for their clients. We offer a free 30 minute phone call with a CNote Team Member to answer questions and to provide information about onboarding best practices. To schedule your call, email email@example.com.
CNote is a low risk investment product. As described below (see section on CNote’s Triple Protection Plan), there are several layers of protection for your investment, but it is not totally risk free.
To understand the riskiness of CNote, you need to understand where your money is invested. CNote invests in Community Development Financial Institutions, commonly called CDFIs. CDFIs are U.S. Treasury certified financial institutions that provide financial services in low-income communities and to people who lack access to traditional financing.
So does that mean that CDFIs lose money often because they loan to low-income communities?
Actually, no. CDFIs have been around for over 20 years, and in that time they’ve racked up an impressive record of financial performance. As a whole, all of the CDFIs that CNote invests in have historical loss rates less than 1% and CNote’s CDFI partners have not lost a single investor dollar to date. Period.
If CDFIs are so great, why aren’t big banks or companies investing in them?
Actually, they are. CDFIs receive investments from just about every major bank – likely including yours. CDFIs are a trusted, and much studied, financial innovation that have a proven track record of security and social impact. They were just never readily accessible to everyday savers like you and me before.
To illustrate, here’s an official Bank of America video explaining the CDFI model and their heavy investment in the same.
CDFIs have been around for more than 20 years and are not new. What is new is the opportunity for regular people like you and me to invest in CDFIs. CNote is the first company that provides the average investor access to these investment vehicles. In the past, CDFIs generally only received money from very wealthy individuals and large institutions. We’ve changed that. CNote allows you to invest like those big institutional investors, except instead of signing a check in the boardroom you can invest your dollars sitting in your bedroom.
So, are they really that safe?
Every investment has some level of risk, and past successes don’t guarantee future performance, but CDFIs have fared well in many financial conditions. Indeed, after the great recession of 2008, CDFIs helped fill in many of the lending gaps created by bank failures and a paucity of lending. CDFIs on the whole did not face any significant financial jeopardy as a result of the broader economic distress during the economic downturn. Indeed, they generally fared as well as, if not better than, most banks. The chart below shows net charge off rates (loan loss percentages) from 2000 to 2015. Larger percentages mean more loan losses. As you can see, CDFIs have a strong performance history when contrasted with FDIC-insured banks, before, during, and after, the financial crisis.
CNote’s partner CDFIs are all certified by the U.S. Treasury Department, have less than 1% Net Charge Off Rate (meaning losses), and hold strong cash reserves (meaning they can pay back lenders even when their borrowers are not able to pay back their loans). When compared to FDIC institutions (the banks where you’re keeping your savings at now), CDFIs have an extremely strong economic record.
Ok, CDFIs sound safe, but what happens to my money if something happens to CNote?
CNote is not a holding company or a bank–we don’t actually hold your money. When you deposit your money with CNote, we invest it with our CDFI partners, so they are contractually obligated to pay back your principal and interest.
To illustrate, even if a giant asteroid hit the CNote offices and wiped us all out your money wouldn’t be vaporized or be lost in the cloud as a series of ones and zeros, it would be with one of our CDFI partners, earning interest, and waiting for you.
CNote’s Triple Protection Plan consists of three layers of capital protection built into your CNote investment to help reduce the risk of loss.
First, our CDFI partners have a general recourse obligation with CNote which means they are obligated to pay CNote back even if their borrowers are unable to repay their loans. We negotiated this contractual obligation with our partner CDFIs to assure extra protection for our customers.
Second, state and federal programs exist to protect money invested in CDFIs. For the CDFIs participating in these guarantee programs (all CNote partner CDFIs are participating members), a portion of the loans that CDFIs extend to small businesses are covered. CDFIs are required to maintain their own loan loss reserve fund (pool of money to cover losses) to be eligible for those protection programs. So not only are a portion of the loans protected by the government, but individual CDFIs also carry a loss reserve.
Finally, CNote has established a loan loss reserve fund for additional peace of mind for our users. This means that if for some reason one of our CDFI partners suffers unexpected losses, and the other failsafes listed above don’t cover them, CNote will step in with its own loss reserve fund to cover some or all of those losses.
CNote’s Triple Protection Plan significantly reduces the risk of principal loss. Yet, it is important that all investors recognize that any investment carries some level of risk.
CNote generates a competitive return by lending to rigorously-diligenced, hand-selected, U.S. Treasury Department-certified Community Development Financial Institutions (CDFIs). Prior to CNote, investing in CDFIs was generally limited to large foundations or banks. CNote has made this great asset class, along with its returns and social impact, available to everyone.
CNote’s returns are not guaranteed. The current 2.75% return is based on historical performance of CNote’s CDFI partners, which have a long-standing track record of strong performance.
The 2.75% rate offered by CNote is not a fixed rate, meaning it can change over time. As the prime rate changes, we will likely adjust our rates to maintain a competitive return in comparison to traditional savings accounts.
To illustrate, effective January 1, 2019, we raised rates for all users to 2.75% from 2.5%.
The interest rate on your CNote account is directly correlated with the cost of capital that we offer to our CDFI partners. Our intention is to provide competitive returns to CNote members while making sure we do not contribute to predatory lending.
Community Development Financial Institutions (CDFIs) are U.S. Treasury Department certified financial institutions created by the 1994 Riegle Community Development and Regulatory Improvement Act. CDFIs’ main mission is to promote economic development and job creation in local communities. Their impact is measured by their financial performance along with their commitment to underserved communities like women and minorities. To learn more about CDFIs, read our comprehensive overview.
Community development financial institutions (CDFIs) are dedicated to delivering responsible, affordable lending to help underserved communities join the economic mainstream. For over 20 years, CDFIs have had a proven track record of making an impact in those areas of America that need it most. To date, CDFIs have created over 1 million jobs and provided over $100 Billion in affordable capital.
Social impact is the positive change that comes as a result of some action. CNote’s definition of positive change is increased financial inclusion, social justice, and equality. At CNote, we are working to close the wealth gap by increasing the amount of capital allocated to minority and women-led businesses, creating new jobs, and strengthening local communities.
CNote customers can see tangible social impact through their investment in our platform. Check out some of our small business success stories here.
Deciding what to do with your money is hard. The world of finance, with all its insider language, doesn’t make it any easier. At CNote we want you make the best decision for YOU. We try to make finance simple and transparent, but if there is anything confusing or unclear and you have questions, please contact us at firstname.lastname@example.org, or call us at (800) 449-6275.
There are no stupid questions. Ask away!