Real Estate NewsSmall Agency Aids Underserved Areas With Credit Needs
With the recent certification of the Elk Basin Federal Credit Union in Powell, WY, the little known Community Development Financial Institutions Fund has become a truly national program. It now has members in all 50 states as well as the District of Columbia, Puerto Rico and the U.S. Virgin Islands.
Authorized under the Riegle Community Development and Regulatory Improvement Act of 1994, the fund was created to expand the availability of credit, investment capital and financial services in distressed urban and rural communities. It is a wholly-owned government corporation within the Department of Treasury.
As of June 30, there were 459 CDIFs acting as specialized financial institutions in market niches that have not been adequately served by traditional institutions. They provide a wide range of financial products and serves, including mortgage financing for first-time home buyers, loans to rehabilitate rental properties and commercial loans to start or expand small businesses.
Under the program, federal resources are used to build the capacity of private, for-profit and non-profit financial institutions to provide capital and services. CDIFs include community development banks, credit unions, loan funds, venture capital funds and micro-enterprise loan funds.
According to Acting Director Jeffrey Berg, institutions applying for government funds must have a business plan that demonstrates their ability to raise money on their own. And applicants are evaluated in much the same manner as private investors look at the worthiness of their potential investments.
In five rounds of funding so far, the fund has made nearly $295 million in investments directly to CDFIs and has awarded almost $136 million to regulated banks and thrift institutions to invest in CDFIs or increase their own activities in underserved areas.
Shortly, the fund is expected to roll out a new initiative to specifically benefit Native American, Alaskan and Hawaiian communities and promote economic development.
Under this effort, qualified community development lenders, organizations experienced in banking and lending in these communities, and native organizations themselves will be given technical assistance grants to help them increase their access of capital, create more CDFIs and increase the capacity of lending and investing to serve the three native groups.
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