A certified Community Development Financial Institution (CDFI) is a specialized financial institution that works in market niches that are underserved by traditional financial institutions. CDFI’s provide a unique range of financial products and services in economically distressed target markets, such as mortgage financing for low-income and first-time homebuyers and not-for-profit developers, microloans for small businesses, flexible underwriting and risk capital for needed community facilities, and technical assistance, commercial loans and investments to small start-up or expanding businesses in low-income areas.
CDFI certification is a designation conferred by the CDFI Fund of the U.S. Department of Treasury and is a requirement for accessing financial and technical award assistance from the CDFI Fund through the CDFI Program to support an organization’s established community development financing programs.
Metro Community Development is a Certified CDFI, an approved Small Business Administration (SBA) intermediary micro loan lender and a member of the Federal Home Loan Bank of Indianapolis with focus on serving the Flint MSA, Shiawassee, Lapeer, North Oakland and Saginaw MSA. These resources create the opportunity of leveraging public and private financing for community stability and economic development.
NEED FOR CREDIT, CAPITAL, AND FINANCIAL SERVICES
There is significant information revealing a strong need for credit, capital and financial services. HMDA data reveals a 31% denial rate of all conventional home purchase loan applications in the MSA.
Additionally, there is significant unmet need for capital in MCD Investment Area. The six largest Michigan banks saw their bad assets increase between 75 and 344 percent between 2007 and 2008. Similar to financial markets across the nation, MCD Investment Area has been hard hit by the economic recession consequently leaving those who are not financially literate underserved.
Metro Community Development fills a significant gap in the Investment Area by providing the financial products to underserved individuals coupled with the counselling needed to maintain healthy financial habits.
BUILDING A CDFI
In 2008, MCD received a TA grant from the CDFI fund of U.S. Department of Treasury to hone its business model, develop underwriting policies and procedures, and hone and develop products that are responsive to the needs of the community. In developing a business model, MCD identified two overarching motivations that drive the work: maintaining community stability and stimulating community economic development. These goals align along what can be referred to as a community development continuum including asset building, community building, and coalition building. At the heart of each portion of the continuum, MCD role is that of a facilitator, working to coordinate resources and fill in both knowledge and financial gaps. The goals drive the financial products and development services the organization provides to the investment area and help create capital for economic development and sustainability.