Define: Community Development Financial Institutions

A CDFI is a specialised financial institution that provides financial services and support to underserved communities, typically low-income areas or populations lacking access to traditional banking services.

CDFIs offer a range of financial services, including loans, investments, and technical assistance, to individuals, businesses, and organisations in underserved communities. These services aim to promote economic development, affordable housing, small business growth, and community revitalization.

CDFIs differ from traditional banks in their mission and target market. While traditional banks primarily focus on profit-making, CDFIs prioritise community development and serving underserved populations. They often have a deeper understanding of the unique challenges faced by these communities and offer more flexible lending terms.

You can find a CDFI in your area by visiting the website of the Community Development Financial Institutions Fund (CDFI Fund), a programme of the U.S. Department of the Treasury. They provide a searchable directory of certified CDFIs across the country.

Yes, anyone can apply for a loan from a CDFI. However, CDFIs typically prioritise lending to individuals and businesses in underserved communities who may have difficulty accessing credit from traditional financial institutions.

Yes, CDFIs are regulated by the CDFI Fund, which is a program of the U.S. Department of the Treasury. The CDFI Fund provides financial assistance, training, and technical support to certified CDFIs and monitors their compliance with programme requirements.

There are several ways to support CDFIs. You can choose to deposit your money in a CDFI bank or credit union, invest in a CDFI loan fund, or donate to a CDFI organisation. By doing so, you can help promote economic development and financial inclusion in underserved communities.

Yes, CDFIs often specialise in providing loans and technical assistance to small businesses in underserved communities. They can help you access capital, develop a business plan, and navigate the challenges of starting or expanding your business.

While CDFIs originated in the United States, similar models have been adopted in other countries. However, the term “CDFI” is primarily used to refer to U.S.-based institutions. Other countries may have their own variations of community development financial institutions.