Over more than a decade, and through the great financial crisis, CNote’s CDFI partners have not lost a SINGLE investor dollar.
At CNote our mission is to make accessible and easy-to-understand financial products that generate strong returns while having a positive impact on society.
We’ve built a product that generates a 2.75% return while creating jobs and investing in small businesses across the country. We do that by providing access to a proven asset class that banks and other large institutions have been investing in for decades.
No investment is risk-free, including an investment with CNote. However, CNote was built to minimize the risk of loss starting with the assets we invest in, which have a history of strong financial performance. To illustrate, certified Community Development Institutions (CDFIs), the vehicles we invest your money in, out-performed FDIC institutions during the Great Recession.
The chart below compares net charge-off rates, which is shorthand for the percentage of loans a lender has to write off as bad (uncollectible). The lower the net charge-off rate, the better. What this statistic tells you is that the CDFIs CNote invests in keep charge-offs low and are smart stewards of your capital.
Even when the United States economy was in its most vulnerable state, CDFIs had lower charge off rates than FDIC insured banks.
Investing in a different model, for good
Banks have one incentive: to maximize their profits. As we saw in the Great Recession, this can lead to excessive risk-taking to the detriment of clients, investors, and society. CDFIs, on the other hand, are proven, non-profit financial institutions that have one incentive: making good investments in underserved communities to spur economic development. CDFIs know that their existence is contingent on being responsible with invested capital, which is supported by their strong track record. While other financial institutions may have an incentive to make risky loans to generate more returns, CDFIs are focused on making sustainable loans that will be repaid and improve the economic health of the communities they serve.
Losses are possible with an investment in CNote but we have taken affirmative steps to mitigate the risk. A CNote customer can lose money in their investment if a partner CDFI has net charge-off rates in excess of their loss reserves. In other words, if a partner CDFI makes a lot of bad loans, or the bulk of their investments fail to perform, then they will be faced with financial losses which they may be forced to pass on to customers.
CNote has an extensive due diligence process for evaluating potential partner CDFIs to prevent that exact scenario. CNote only partners with industry-leading CDFIs with a proven financial track record. CNote evaluates CDFIs along multiple key performance indicators to maximize return and minimize the risk of loss.
Additionally, we diversify by investing money across multiple CDFIs, not just a single entity. That way, if there are significant charge-offs at one CDFI, the investment portfolio overall will not be substantially impaired. CNote offers additional protections, such as our Triple Protection Plan (details in FAQ) that provides additional layers of protection to prevent capital losses.
CNote accounts have no minimums, no fees, and no earning limits.
CNote currently pays 2.75% or more (users can earn increased rates of returns on their balance by referring new users) on all invested capital.
Because CNote is a unique product, comparisons to traditional financial products are imperfect. As a cash alternative, some users may compare CNote to CDs, savings products, or bonds, however, that ignores the social impact of CNote.
If you’re unsure about making an investment in CNote you should consult with a financial advisor and review our offering circular.