Tricolor recently released a whitepaper about its success as a subprime auto-finance provider that specializes in working with Hispanic consumers, receiving designation as a Community Development Financial Institution (CDFI) by the U.S. Treasury Department last year.

Not only does the federal government applaud Tricolor’s 13-year-old automotive enterprise, but also just last week Kroll Bond Rating Agency upgraded ratings of three classes of asset-backed securities Tricolor issued back in 2018. KBRA said it made the move in the midst of the coronavirus pandemic “due to increased credit enhancement that is sufficient to support the rating actions.”

Tricolor reiterated in its whitepaper titled, “Responsible Lending in Subprime Automotive Finance” that it has four “building blocks” to building the company that indicated as of February it had originated nearly $1 billion in auto financing at its network of dealerships throughout California and Texas. Those four components highlighted included:

— Provide affordable financing to low-income borrowers through lower interest rates and lower gross margins, increasing the probability of their success in repayment.

— Help borrowers to establish bureau credit by reporting to major bureaus, through partnerships with Experian and Equifax, regardless of status, in order to ultimately mainstream credit invisible borrowers.

— Leverage technology and deep learning to develop a proprietary model in order to segment borrowers with little or no credit history, driving more favorable and attractive lending terms.

— Support customers with financial literacy programs with customized content to empower them in order to access mainstream financing and ultimately, build a better future.

“Since launching our business over 12 years ago, our mission has been to enhance the life of our customer with access to affordable financing, the opportunity to build credit, and ultimately, a path to a better future. Importantly for us, the CDFI certification validates our core beliefs and purpose-driven aspiration to do well by doing good,” Tricolor wrote in its whitepaper.

Last November, the company landed that CDFI certification, which provides Tricolor with greater opportunities to partner with banks to expand its affordable, credit building lending strategy. The designation can enable banks to legally invest in Tricolor securities to promote public welfare and fulfill their Community Reinvestment Act (CRA) obligations.

And in February, an unnamed institution did just that, as Tricolor announced it received a $30 million preferred equity investment from a global institutional investor.

Tricolor emphasized the approximately 1,000 certified CDFIs in the U.S. are selected as part of an extensive application and review process. The majority are nonprofits. Tricolor said it becomes the only lender among all auto asset-backed securities issuers to earn CDFI certification and one of a select group of for-profit enterprises that meet the rigorous standards for helping communities.

“We are humbled and honored to join this exclusive group of CDFIs as named by the U.S. Department of the Treasury. It truly speaks to the essence of our mission-driven work and will enable us to grow in service to even more deserving individuals,” Tricolor founder and chief executive officer Daniel Chu said in a news release at the time of the November announcement.

“Since the beginning, our commitment has been to put the customer’s best interests and needs at the center of every interaction, and this certification not only validates this purpose but significantly enhances our ability to scale our lending platform,” Chu added.

And having the support of investment experts and observers certainly could be helpful, too.

KBRA dissected Tricolor’s latest activities and the reasoning for its rating action in this report.