A CDFI loan is a type of financing provided by a Community Development Financial Institution to support business growth and development in underserved communities. CDFI loans typically offer lower interest rates, more flexible terms, and smaller down payment requirements than traditional bank loans. They are designed to accommodate the unique needs of small businesses and entrepreneurs who might not otherwise qualify for financing.
CDFI loans are funded through a combination of government programs, private investments, and philanthropic sources. The U.S. Department of the Treasury's CDFI Fund, for instance, provides financial support to CDFIs through various initiatives, including the New Markets Tax Credit (NMTC) program and the Capital Magnet Fund (CMF).
