CDFI Programs permits Community Development Financing Institutions (“CDFIs”) and, in some case Community Development Entities (“CDEs”) to participate in various programs of the Community Development Financial Institutions Fund (the “CDFI Fund”).
An applicant must be a financial institution (such as a banks or a credit union), a loan fund or a venture capital fund that specializes in serving individuals and communities that are underserved by traditional financial institutions.
Please click the following links, each of which provides more information about the 4 major CDFI Programs:
- The Capital Magnet Fund Program provides grants for financing of affordable housing activities, as well as related economic development activities and community service facilities.
- The Bond Guarantee Program provides (a) authorization to issue bonds to provide CDFIs with access to substantial capital that is then used to reignite the economies of very distressed communities, and (b) a 100% guarantee on such bonds through their maturity dates.
- The Bank Enterprise Award Program provides monetary awards to FDIC-insured depository institutions (such as banks and thrifts) that successfully demonstrate an increase in their investments in CDFIs or in their own lending, investing, or service activities in the most “Distressed Communities.”
- The Healthy Food Initiative Program provides funds which can be used to finance business and real estate projects that provide healthy foods.
A CDE is a partnership, corporation or nonprofit corporation which (a) has the primary mission to service, or provide investment capital for, low-income communities or low-income persons; (b) maintains accountability to residents of low-income communities through their representation on any governing board or advisory board of such entity; and (c) certified as such by the CDFI Fund (unless it already has been certified as a CDFI). Qualifying as a CDE does not require that the more stringent requirements to qualify as a CDFI must be satisfied.
A CDFI automatically qualifies as a CDE and does not need to apply to the CDFI Fund to be a CDE. A “CDFI” is a financial institution (a) provides credit and financial services to underserved markets and populations; (b) that has been certified as such by the CDFI Fund; and (c) may be a:
- community development bank (which is a commercial bank organized to generate economic development in low- to moderate-income geographical areas and serve residents of such areas);
- community development credit union (which is a member-owned financial cooperative, controlled by its members organized to assist people by providing its members credit at competitive rates as well as other financial services in connection with community development);
- community development loan fund (which provides financing and development services to businesses, organizations, and individuals in low-income communities, including microenterprise, small business, housing, and community service organizations);
- community development venture capital fund (which provide equity capital to businesses in underinvested markets, seeking market-rate financial returns, as well as the creation of good jobs, wealth, and entrepreneurial capacity);
- microenterprise development loan fund (which provides financing to individuals and small businesses in low-income communities); or
- community development corporation (which is a nonprofit corporation organized to provide programs, offer services and engage in other activities that promote and support community development, including affordable housing education, community organizing and real estate development).
There are potentially 2 types of applicants for CDFI Programs. First, a “first-tier” applicant (such as a bank), which directly applies for the CDFI Program. Second, if applicable, a “second tier” applicant (such as a borrower), which applies to the successful “first-tier” applicant (such as a bank), which facilities the deployment of the particular subsidy.