What is a CDFI?
The term “CDFI” is one you may not have heard, but you probably know what one is – and, more importantly what it does. CDFI is a technical industry term, short for Community Development Financial Institution that describes banks, credit unions, loan funds, and nonprofits providing critical financial services to communities where none are – or were – available.
According to a recent industry report, CDFIs have about $5 billion at work in communities, helping to make loans available for small businesses, provide job training and daycare facilities, get families into affordable homes, and teach people how to set up savings and checking accounts. Along with over 66 or our borrower organizations, we too are a certified CDFI.
Together we provide opportunity where there is none. We manage risk that more commercial entities may not be willing to take. In short, we help “the little guy,” and our collective services are more in need than ever.
Investors in our Community Investment Note support groups such as the the Seattle Economic Development Fund (SEDF), a certified CDFI since 1998 that provides economic opportunities to under-served populations in the Pacific Northwest. SEDF was able to help small business owner Rosamaria Rosales. When Rosamaria’s husband died three years ago, she was certain she would have to close her small business. Closing would have been a big loss for Rosales, but also for the community. Housed at Centro de la Raza, Excelsior Travel Service was the Pacific Northwest’s first travel agency serving Spanish-speaking clients. Rosales sought and received financial assistance from SEDF, which allowed her to save the business and keep her staff employed. Now, Excelsior Travel Service celebrates its 17th year in business.
© Photo courtesy of Seattle Economic Development Fund
Saving a Local Business
Natural Capital Investment Fund’s extensive work with Laurel Creek Hardwoods demonstrates the mix of capital and technical assistance the Fund brings to its work with small businesses. When the out-of-state owners of the Richwood sawmill decided to sell off their holdings in Central Appalachia as part of a corporate restructuring program, they could not find a buyer and simply shut down the mill. Bill and Sharon Glasscock had been working at that mill for over 10 years.
© Photo courtesy of Natural Capital Investment Fund