Community Information Database

Subject Description

Community Development Financial Institutions

Private sector financial intermediaries with community economic development as their primary mission that find ways to make loans and investments that conventional financial institutions would consider too high risk or not sufficiently profitable. CDFIs rebuild businesses, housing, voluntary organizations and services central to revitalizing poor and working class neighborhoods. While CDFIs share a common mission, they have a variety of structures and development lending goals. There are six basic types of CDFIs. Community development credit unions and community development banks supply underserved communities with traditional retail banking services like savings accounts and personal loans. Microenterprise development loan funds provide small amounts of business capital to small scale entrepreneurs. Community development loan funds lend to build businesses, affordable housing and community facilities. Community development venture capital funds provide equity and management expertise to small, often minority owned businesses that promise rapid growth. The ripple effects of CDFI activity bring responsible homeowners, locally-owned businesses, neighborhood facilities, first-time savers, and other positive benefits to communities that reach far beyond the financial bottom line.

Taxonomy Code: TB-1550

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