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Having worked in both venture capital and financial services, I have seen some of the best and worst faces of finance. But there is one financial segment that is largely ignored and vastly under-celebrated. I call them “the good guys and girls of finance” for many reasons, but also because it’s easier than their name: CDFI.CDFIs, or Community Development Financial Institutions, were created over 20 years ago by the U.S. Treasury Department to help ensure that our country’s most underserved populations – low-income neighborhoods, women and minorities – were getting fair access to capital. Think about it this way: large banks don’t always find it easy or prudent to lend capital to certain types of small businesses, including first time entrepreneurs or entrepreneurs who need less than 100K to start up their business. And if you are a woman and/or minority, unfortunately, the statistics have shown you are even less likely to secure that capital.
Herein lies the opportunity, and the triumph, of CDFIs. Their mission is to ensure that high-potential, underserved borrowers get the capital they need to run their businesses. They provide fair costs of capital, reasonable short and long-term products and one more thing – business coaching. CDFIs understand that running a business and assuming a loan are large responsibilities that, for most of us, require additional coaching and mentorship.
If you haven’t heard of CDFIs I encourage you to check them out. Everyday I stumble upon new learnings and success stories of how CDFIs are transforming our communities. I look forward to sharing them with you.
– Cat Berman, Co-founder