Melanie’s note: Hi friends. Today, we have a different sort of post than I usually publish here. To be transparent, this article was for a prospective client and they didn’t end up using it. But I still think it offers value. Do you know why? Because before writing this article I had no clue what a CDFI was. I’m learning more and more that what really makes a good writer is the ability to write about things you’ve never heard of, and breakdown complex issues in an easy-to-read format. So often we think that people have to be experts to write about anything, but I’m here to tell you that’s bullshit. Hello, Internet! You can learn. Your skill as a writer is to distill complex information and make it engaging. I can’t tell you how many articles I’ve written about things I’ve never heard of and the whole time I’m mentally freaking out because “Oh my gosh, I don’t know what I’m talking about. I’m going to be found out!” Then I get some positive feedback, like last week when a client told me, “Good job on taking a potentially boring topic and making it interesting and easy-to-understand.” Ah, validation. This long-winded note is to tell you that as a writer, or whatever you are or whatever you want to be, you can do it, even if it scares you or you are not an expert.

Entrepreneurship can be rewarding for many people, but sometimes it’s difficult to get started, especially in terms of funding. Starting any enterprise costs money, and there are lots of hurdles to jump when it comes to funding. This can make things tricky if you have limited resources and are just starting out. As an entrepreneur or small business owner looking for financial resources to grow your business, you may have already had some rough experiences with this. But not to worry — there is another exciting option to consider: a CDFI. Read on to find out what it is and how it can help you.

What is a CDFI?

A CDFI, or Community Development Financial Institution, is a financial institution, like a regional bank or credit union, that functions kind of like a middleman between the sources of their funding and you, the eager entrepreneur on a mission. Their funds come from private (foundations, religious institutions, corporations, etc.) and public sources, in addition to the CDFI Fund, which is administered by the U.S. Department of Treasury.

Never heard of CDFIs? They’ve actually been around since the 1970’s, but grew in numbers as a result of the Riegle Community Development and Regulatory Improvement Act of 1994. Their mission is to empower their local communities through capital resources. As such, they offer loans at competitive rates to folks who are looking to start an enterprise with a community focus. Pretty awesome, right? By funding the likes of small businesses, nonprofits, and microenterprises, CDFIs have been creating jobs and fueling local economies.

CDFIs are able to offer credit and financial services to underserved areas and populations that are typically overlooked and/or considered undesirable candidates for traditional loans. This can include people with:

— No or low credit

— Bad credit

— A history of bankruptcy

CDFIs come in different forms as well. Here are some examples of what they are and who they help:

Community Development Bank or Community Development Credit Union:

— Provides personal loans, savings accounts, and other retail banking services to those who might not be eligible for funding via traditional avenues.

Community Development Loan Fund:

— Lends funds to build local businesses, support affordable housing, and bolster community facilities.

Community Development Venture Capital Fund, Microenterprise Development Loan Fund, and Community Development Corporation:

— Provides capital to entrepreneurs and minority owned businesses.

For an institution to qualify as a CDFI and receive funds from the CDFI fund, they need to demonstrate that they are serving a specific underrepresented geographic region, with a mission to improve the community they serve.

How Can a CDFI Help Me?

If you are a small business owner (or aspire to be one), nonprofit organization, or entrepreneur, a CDFI may be a viable resource to secure funding, especially if you have been previously rejected by traditional avenues of funding. A CDFI doesn’t just look at your bank account; they look at the big picture, and at the person behind the project.

Remember, CDFIs have a core mission to serve communities. The work is relationship-based and mission driven. It is to help fund community based projects that will reinvest back into the community and support the local economy. If you are interested in funding, building relationships in community, and starting a project that will enhance the work of that community, a CDFI might be a good fit for you.

Things You Should Know

Because of the unique opportunities offered, a CDFI loan typically takes longer to acquire than one from a traditional bank. If you are interested in pursuing a loan from a CDFI, it’s important to demonstrate how you will reinvest funds back into community. Will that be through job creation, by providing a service to the community, or something else?

Do your research on what type of funds you are looking for, and clearly understand the terms of the funding. CDFI Coalition is a helpful resource with all you want to know about CDFIs.

How to Choose a CDFI

If you think you might benefit from a CDFI and want to explore options in your area, you can search the Opportunity Finance Network’s website, which has a helpful map to easily find CDFIs nearby.

Another resource for more in-depth information regarding CDFIs state by state is by looking at the state profiles on the CDFI coalition website. Each profile provides information on how many CDFIs are in the state, how much funding has been dispersed, jobs created, and more.

CDFI Success Stories

CDFIs play a large part in enriching underserved communities. Currently, there are over 950 certified CDFIs, which serve both urban and rural communities.

In March of 2014, the CDFI Coalition 20th Anniversary Report highlighted CDFIs in various communities as well as success stories of some of their beneficiaries. Examples of CDFI success stories include:

— An African-American woman owned dental clinic in Tennessee

— A Salmon fishing business in rural Alaska

— A Public Charter School in Washington D.C.

— An organic agriculture small business in Illinois

— Affordable town houses in Ohio

You can make an impact too, even if you aren’t a business owner or entrepreneur.

If you are interested in fostering community development and would like to contribute to a CDFI, you can look for opportunities, such as Starbucks’ Create Jobs for USA Fund, which was created in 2011 and has raised over $7 million to support CDFIs.

The Bottom Line

As you can see, CDFIs play an integral part in supporting local community with capital resources that can be reinvested in community. For the past 20 years, CDFIs have worked all across the United States to support local enterprise. Could they help you?


Melanie is a freelance writer currently living in Portland, Oregon. She is passionate about education, financial literacy, and empowering people to take control of their finances. She writes about breaking up with debt, freelancing, and side hustle adventures at

Currently she puts more than 50% of her income towards debt, while living a frugal, fun life. In addition to her love of personal finance, art and music, she is also a karaoke master. Follow the adventure @DearDebtBlog.

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8 responses to “What Are CDFIs and How Can They Help Me?”

  1. I absolutely love your note at the beginning. I feel the same way a lot of times, but it’s basically a learning experience! You never know when it might pay to know things. I’ve never heard of CDFIs, and I’ve worked in small business financing before. Go figure!
    Erin @ Journey to Saving recently posted…A Reintroduction of SortsMy Profile

  2. I think part of the joy of freelance writing is being forced to research and find out about new things. I honestly have never heard of CDFI’s, but when I am ready to grow my business, I will have to consider them as an option.
    Shannon @ Financially Blonde recently posted…Top Ten Ways to Improve Credit ScoreMy Profile

    • Melanie says:

      I know, I love it! I get to learn about things along the way too. It’s such a stark difference from my grad school days where I felt like I had to be an expert to say anything.

  3. I know what you mean about writing about topics you initally have no clue about. I have learned so many new things due to research when writing articles. Thanks for sharing the CDFI post since it’s a viable and US treasury backed alternative lending source. I also like the community emphasis of their approach.
    Kassandra @ More Than Just Money recently posted…Music To My Ears: BelbelMy Profile

  4. I did not know what a CDFI was prior to this post, so thank you for sharing!
    Natalie @ Financegirl recently posted…7 Reasons Why I Will Never Lease A CarMy Profile

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