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Dec. 6, 2017

A Growing Source of Community Funding

The number of Community Development Financial Institutions (CDFIs), which provide credit products and financial services to underserved markets and populations, is increasing in the Southeast according to a survey by the Richmond Fed.

These institutions are important sources of funding for first time homebuyers, small businesses and neighborhood revitalization efforts in low- and moderate-income communities. They can be banks, credit unions, loan funds, microloan funds or venture capital providers. 

“We pay attention to CDFIs because they increase access to credit in underserved communities and help foster economic stability. They are important sources of funding for many community development efforts,” said Emily Wavering, community development senior research analyst for the Richmond Fed.

From 2015 to 2017, the number of certified CDFIs in the Southeast grew from 300 to 384. Most of that growth came from existing financial institutions becoming certified by the U.S. Department of Treasury’s CDFI Fund.

Demand for CDFI services has grown as well, according to the Richmond Fed’s Survey of CDFIs in the Southeast. Nearly 81 percent of the CDFIs surveyed indicated they experienced increased demand in 2016, with 90 percent anticipating even more demand in 2018. In addition to offering loans and other typical banking products, CDFIs often provide small business technical assistance, credit counseling, financial education and other development programs. 

“The demand for CDFI services is tempered by the challenges that many CDFIs face in accessing funding. According to the survey, the lack of funding is a significant issue and access to federal grants remains critical for their growth,” said Wavering.

The Richmond Fed’s Survey of CDFIs in the Southeast is a biennial survey, which began in 2009. The 2017 survey included data from 126 CDFIs in Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North Carolina, South Carolina, Tennessee, Virginia, West Virginia and the District of Columbia.

Learn more about CDFIs and the Richmond Fed’s work with these organizations.

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