OBDC is proud to be a Community Development Financial Institution (CDFI), but we find many people don’t understand what CDFIs are of how they have an impact in local economies. Here are some CDFI myths dispelled:
CDFIs are not regulated.
CDFIs are certified by the US Department of Treasury. This certification has to be updated, and CDFIs have to demonstrate that at least 60% of our work with with low-to-moderate income individuals or in low-to-moderate income neighborhoods. For more about the certification process, please click here.
CDFIs only lend public (government) money.
CDFIs have a wide-range of funding options. Organizations may offer loan products supported by federal, state, or local government agencies, as well as loan products supported by private banks and privately raised funds. OBDC offers all of these options, and we work with our clients to find the best fit and lowest possible interest rates.
CDFIs have higher interest rates than banks.
It varies by organization. OBDC offers 7.25% interest rates on most of our loan products, which is significantly lower than a credit card, and even some traditional lenders.
CDFIs don’t support start-ups.
Many CDFIs fund start-ups. Opportunity Finance Network, describes CDFIs as organizations that believe that all people deserve opportunities. Start-ups make up 58% of OBDC’s clients over the last five years. Click here to see OFN’s video about CDFIs.
Click here for more information about CDFIs or give us a call. We’d love to talk to you about how we can support your business development.
