Role of Community Development Financial Institutions in North Carolina

<p>The main purpose of Community Development Financial Institutions (CDFIs) is to expand access to capital in low-wealth and underserved communities in order to foster economic development and revitalization. Many of these communities have been left out of the financial mainstream, unable to access financial services and capital from traditional banks. In recent years, particularly after the Great Recession, the credit market tightened even further. Large banks pulled back from small business lending and enacted tighter lending criteria. As a result, many entrepreneurs—even those that were previously able to secure small business loans—were left struggling to access the credit they needed to startup or expand their businesses. That is where CDFIs come into play.</p> <p>CDFIs are typically smaller institutions that are able to evaluate businesses on a broad range of criteria—not just credit scores— and benefit from a close relationship with their borrowers. Accordingly, CDFIs are able to take on additional risk and make loans that large banks will not. A report released by The Support Center in November showed that CDFIs in the state are playing a growing role in filling the lending 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. In addition, The Support Center found that:</p> 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 Carolina’s CDFIs hold $1.17 billion in assets, and [...]