(ARA) – Despite signs of economic recovery, many small business owners continue to struggle to borrow money to sustain or grow their companies. This can have a big impact on local communities, which rely on small businesses to create much-needed jobs and provide critical services. With many traditional credit sources continuing to keep a tight rein on lending, many small business owners simply do not have access to conventional means of credit. The good news is that small business owners are increasingly able to access alternative and innovative sources of financing, including Community Development Financial Institutions (CDFIs).
CDFIs, which were created more than 30 years ago, provide affordable loans and banking services in communities that are underserved by traditional banks. These institutions have developed valuable community and business expertise, designed specialized loan products and they have a remarkable track record of success. CDFIs loaned and invested more than $2.2 billion in fiscal year 2008. Since their inception, CDFIs have provided more than $22 billion in financing, supported more than 51,000 small businesses and helped create thousands of new jobs. CDFI loans to small business typically range from $15,000 to $300,000.
In addition, CDFIs often offer non-financial services, such as entrepreneurial education, savings programs and financial literacy training, which can help small business owners develop and grow their operations and prepare the next generation of entrepreneurs for success.
“CDFIs are a critical economic lifeline to small business owners, especially during periods of prolonged economic weakness,” says Bob Annibale, global director of Citi Microfinance and Community Development. “In many cases, they can make the difference between whether or not a small business struggles to survive or expands and creates new jobs, supporting local economic growth and the community.”
While small business owners who work with CDFIs hail from a wide range of industries and geographies, they all share one thing in common: a need for quick financing that is not fully being met by traditional banks. For example, entrepreneurs in the heart of Big Sky country in Montana received two CDFI loans totaling more than $100,000 that enabled them to get their new lumber operation up and running, while the owner of a preschool in New Orleans borrowed money from a local CDFI to fund vital repairs to her building in the wake of Hurricane Katrina.
In coastal Maine, the owner of a specialty seafood company was able to access significant venture capital to expand the company’s distribution nationwide, while continuing to create jobs. In Austin, Texas, the owner of a small construction company received a $40,000 loan to pay for materials and other up-front costs associated with the industry. In all these instances, the need for affordable loans was met with speed and flexibility and was often accompanied by invaluable entrepreneurial education and low-cost training as well as technical assistance in branding and marketing.
Citi recently launched the Communities at Work Fund, a new $200 million fund that will provide financing to CDFIs in urban and rural areas in all 50 states. The fund was created in partnership with the Calvert Foundation and the Opportunity Finance Network (OFN), two organizations expert in CDFIs. To learn more about the Communities at Work fund or to find out if your small business can benefit from the program and how to apply, visit www.communitiesatworkfund.com.
To find out a local CDFI and enquire about a loan, visit www.communityinvestingcenterdb.org.
The current economic climate may be challenging to entrepreneurs, but alternative financing sources like CDFIs can help small businesses keep their doors open – and keep thousands of Americans on the job.
Courtesy of ARAcontent
