Community Development Financial Institution (CDFI) Certification is a designation given by the CDFI Fund to specialized organizations that provide financial services in low-income communities and to people who lack access to financing.
For more information, please see the CDFI Certification Fact Sheet.
Access to affordable financial products and services is a staple of economically vibrant communities. Yet at least one quarter of American households do not have a bank account or rely on costly payday lenders and check-cashing outlets. Additionally, many small businesses and critical community development projects lack access to the capital investment necessary to spark economic growth in their communities. The Community Development Financial Institutions Program (CDFI Program) actively works to address these issues by investing federal resources—which are matched with private funding—in CDFIs working to serve low-income and underserved people and communities.
As a way to enhance community development, he CDFI Program offers both Financial Assistance and Technical Assistance awards to CDFIs. These competitive awards support and enhance the ability of these organizations to meet the needs of the communities they serve.
Financial Assistance awards for community development are made in the form of loans, grants, equity investments, deposits, and credit union shares, which CDFIs are required to match dollar-for-dollar with non-federal funds. This requirement enables CDFIs to multiply the impact of federal investment to meet the demand for affordable financial products in economically distressed communities.
Technical Assistance grants are offered to CDFIs and Certifiable CDFIs to build their organizational capacity.
Both Financial and Technical Assistance awards empower CDFIs to grow, achieve organizational sustainability, and contribute to the revitalization of the communities they serve. The community development loan funds help neighborhoods to access better infrastructure which makes it more appealing to small business owners and investors to come to a region.
For more information about CDFI community development, please see the CDFI Programs Fact Sheet, use the website search form for specific questions, or simply reach out to us to learn more about our role in the context of community development financial institutions.
Enacted through the Small Business Jobs Act of 2010, the CDFI Bond Guarantee Program responds to a critical market need—long-term, low-cost capital that can be used to spur economic growth and jump start community revitalization. Through the CDFI Bond Guarantee Program, Qualified Issuers (CDFIs or their designees) apply to the CDFI Fund for authorization to issue bonds worth a minimum of $100 million in total. The bonds provide CDFIs with access to substantial capital that is then used to reignite the economies of some of our nation’s most distressed communities.
Unlike other CDFI Fund programs, the CDFI Bond Guarantee Program does not offer grants, but is instead a federal credit subsidy program, designed to function at no cost to taxpayers. The bond proceeds are debt instruments that must be repaid.
The Secretary of the Treasury provides a 100 percent guarantee on these loans, with a maximum maturity of 30 years. The Qualified Issuer sells the government-backed bonds to the Federal Financing Bank (FFB)—a government corporation that ensures the efficient use of federal financing—and bond proceeds are used to extend credit to CDFIs for community development purposes. The Qualified Issuer thus acts as a “go between” financier to the broader CDFI community.
CDFIs benefit from the potential scale of the CDFI Bond Guarantee Program, which offers long-term credit at below-market interest rates. This unique program incentivizes and empowers CDFIs to execute large-scale projects, including the development of commercial real estate, housing units, charter schools, daycare or healthcare centers, and municipal infrastructure. In addition to these projects, eligible CDFIs may use the capital to extend credit to other community development borrowers—or Secondary Borrowers—or refinance existing loans at low interest rates, freeing up capital for additional investments. By promoting large-scale, long-term investment, the CDFI Bond Guarantee program helps breathe new life into economically underserved areas.
For more information, please see the CDFI Bond Guarantee Program Fact Sheet.
