Community Development Financial Institutions create jobs & economic development
Today The Support Center released a new report titled “Community Development Financial Institutions in North Carolina: Creating Jobs and Community Economic Development,” which looks at the role of Community Development Financial Institutions (CDFIs) in North Carolina’s economy. CDFIs were established in the 1990s under the US Department of Treasury’s CDFI Fund. These community-based financial institutions provide loans and financial services aimed at revitalizing the nation’s underserved and distressed communities. In North Carolina, there are 17 CDFIs including 10 loan funds, five credit unions, one venture capital fund, and one bank. CDFI banks and credit unions provide affordable personal and business financial services to those who might not be able to access these services through traditional banks. CDFI loan and venture capital funds expand access to capital for small businesses, microenterprises, commercial and residential real estate development (including affordable housing), home purchases, and consumer loans.
As traditional banks pull back from lending, tighten their lending standards, and close down many of their branches, CDFIs have stepped in to fill the gap. In 2010, the 17 CDFIs in North Carolina helped to finance 33,000 businesses and developments that have created 3,100 jobs across the state. CDFIs also provide technical assistance and financial literacy training to help their members and borrowers improve their financial management skills in the long-run.
These services are more important now than ever before, as CDFIs provide a vital link to financial services, capital, and financial literacy that help to improve the financial and economic security of individuals and families in underserved communities. CDFIs not only support the businesses that create much-needed jobs for our state, but they also serve as generators of community economic development.
The report also found that:
- In Fiscal Year 2011 alone, the 999 CDFIs nation-wide made 16,000 loans and investments, worth $1.2 billion, that supported 5,000 small businesses, 17,000 affordable housing units, and 25,000 jobs.
- As of 2010, North Caroina’s CDFIs heldd $1.17 billion in assets, and nearly 33,000 outstanding business, microenterprise, home purchase, consumer, and residential and commercial construction loans. The projects that CDFIs supported created over 3,100 jobs.
- CDFIs are healthy and financially sound institutions. They perform better on key performance ratios than standards established by the CDFI Fund as well as industry comparisons.
- CDFI credit unions and loan funds in the state also provide financial education and technical assistance services to help their members and borrowers, as well as to members of their broader community, increase their financial management skills.
- CDFIs can be a strategic partner to the State of North Carolina and to private institutions, such as banks, in revitalizing the state’s economy. As such, they need additional affordable capital and investments to meet the increased demand for capital and financial services.
The full report can be downloaded here.