When looking for a small business loan, your bank is the first place you’ll likely go. However, there are other safe and responsible funding options out there, including Community Development Financial Institutions (CDFIs). CDFIs are not-for-profit financial institutions that provide fair and responsible financing to the communities they serve. There are CDFIs dedicated to helping small businesses succeed by offering access to capital and resources.
In this overview, you’ll learn what a CDFI is, how they work with small businesses, and how Pursuit is a leading CDFI empowering small business owners.
Why were CDFIs created?
Community Development Financial Institutions (CDFIs) are mission-driven, community-based, financial institutions certified by the US Treasury. A CDFI can be a bank, credit union, loan fund, or venture capital fund. They were created from the lending reforms in the late 1970s to address the inequities in financing for small businesses. Today, there are more than 1,400 certified CDFIs across the country.
CDFIs (with the mission of helping small businesses) support entrepreneurs who may not qualify for traditional financing. This could be due to approval challenges such as insufficient credit history or a shorter length of time in operation, like start-ups and early-stage businesses.
CDFIs are part of a community of non-profit organizations that support small businesses in launching and growing, and creating and maintaining jobs throughout communities across the US.
At the heart of every CDFI is their mission. As lenders, CDFIs are focused on making fair and responsible loans for underrepresented communities throughout the US, and they’ve had a huge impact to date. More than 65% of loans from CDFIs have been given to minority-owned businesses, 48% to women-owned businesses, and 85% to businesses based in low-income areas.
How are CDFIs different than traditional lenders?
What’s the difference between a CDFI and a traditional lender? Let’s take a look.
Since CDFIs generally have more flexible lending criteria than traditional lending institutions, CDFIs that lend to small businesses can approve more loans for those who can’t access traditional loans.
For example, a bank may have certain loan requirements it needs to follow before even considering a small business loan. This can include minimum personal credit scores, two or more years of business operations, and other specific financial criteria. In contrast, CDFIs often have lower credit score minimums or none at all. CDFIs may have programs for start-ups or early-stage businesses and more flexible financial requirements.
CDFI loan programs and options may include SBA loans, state or local municipality-funded loan programs, loan programs funded by private foundations, loan programs funded by local and national banks, or financing directly through the CDFI.
How does Pursuit support its borrowers?
As a CDFI, Pursuit looks beyond the loan requirements. We look at what’s beyond your numbers, get to know you and your business, analyze your plane and visions, and understand your goals. We work to find ways to support your dream by offering financing with terms that make loans easier to budget and repay/ We lend to small businesses in every phase of development, from launch to expansion and beyond.
For Pursuit, supporting businesses and business owners is about more than financing: Even after a loan is approved and the money is dispersed, we can offer a wide range of support for your business.We know that for small business owners, financing is just a first step toward reaching your goals. There are also essential skills and business operations that are needed to make a business successful.
Pursuit offers technical assistance, which comes in the form of actionable and results-driven education and support – including one-on-one consulting, webinars, online resources, and more. You can receive expert advisory services on financial management for your business, optimizing cash flow, how to handle human resource challenges, marketing to reach your target customers, and more.
As your business grows, we will work with you throughout the term of your loan to get your business ready to qualify for bank financing. You’ll get resources to build your credit, improve your financials, and support your operations.
How Pursuit is more than just a CDFIs
As a part of a community of non-profit business support organizations, Pursuit works with local and regional offices of the Small Business Development Centers (SBDCs) and other organizations such as SCORE, as well as in partnership with banks.
Pursuit works with local and national banks to support business owners in the community. Here’s how:
- Banks fund loan programs
- We offer direct assistance to clients who are turned down for bank loans
- Banks lend us money
- Banks donate money to use to support our business support offerings. They do this to support their communities and because of the Community Reinvestment Act.
Pursuit is a CDFI serving businesses like yours
Pursuit is a leading small business lender with a CDFI division serving small businesses across New York, New Jersey, Pennsylvania, Connecticut, Illinois, Nevada, and Washington. We provide more than 15 loan options, including lines of credit for working capital, term loans to purchase, build, or renovate commercial real estate, and much more.
We’ve helped thousands of small business owners get the funding they need to achieve their goals and dreams and we can help you, too.
Start your application today to learn how we can help your business reach higher and grow!