Designated Community Development Financial Institution (CDFI) is a financial institution that provides financial products and services to underserved communities and individuals who lack access to traditional banking services.
5 Facts About CDFIs
(1) CDFIs are certified by the U.S. Department of the Treasury's CDFI Fund, which is a federal agency that supports economic development in low-income and underserved areas across the United States.
(2) What is a community development financial institution? CDFIs are typically community-based organizations that provide loans, investments, and other financial services to low-income individuals, small businesses, and community organizations. They may also provide technical assistance and other resources to help these groups grow and succeed.
(3) CDFIs can be banks, credit unions, loan funds, venture capital funds, or other types of financial institutions. They aim to promote economic growth and community development by providing access to affordable financial services and capital to individuals and organizations that are often excluded from traditional financial systems.
(4) Some examples of services provided by CDFIs include small business loans, affordable housing loans, consumer loans, and financial education programs. By providing these services, CDFIs help to promote economic and social equality, foster entrepreneurship and innovation, and create jobs and economic opportunities in underserved communities.
(5) Many Black-Owned Banks are designated Community Development Financial Institutions (CDFIs). For example:
- Carver Federal Savings Bank – based in NY
- Broadway Federal Bank – based in CA
- Citizens Trust Bank – based in AL and GA
- Optus Bank – based in SC
- OneUnited Bank – based in MA, CA and FL
- Industrial Bank – based in Washington D.C., MD, NJ, NY
- City First Bank – based in California and Washington D.C.
- Southern Bancorp – based in AR
- Unity National Bank – TX and GA
- Liberty Bank – based in AL, IL, KS, KY, MI, MO and MS
OneUnited Bank can offer its “Cash Please No-Credit Check Loan” due to its CDFI designation. The U.S. Dept. of Treasury's Small Dollar Loan Program was created to help designated CDFI's expand consumer access to mainstream financial products like reasonable rate loans as an alternative to high cost small dollar loans like payday loan.
As a CDFI, Industrial Bank annually reinvests over 60% of its assets back into the communities where they serve.
Final take
As of February 2023, the total number of Certified CDFIs is 1396, existing in all 50 states, the District of Columbia, Guam, and Puerto Rico. You can get a list of CDFI's in your area by searching its database.
