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What Is a Community Development Financial Institution?

What Is a Community Development Financial Institution?. Primary mission of promoting community development Serving and maintaining accountability to a target market A financing entity Not a government entity or controlled by a government entity. Northern Initiatives History.

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What Is a Community Development Financial Institution?

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  1. What Is a Community Development Financial Institution? • Primary mission of promoting community development • Serving and maintaining accountability to a target market • A financing entity • Not a government entity or controlled by a government entity

  2. Northern Initiatives History • Launched in 1992, spun out of Northern Michigan University- serving the Upper Peninsula • Certified as a CDFI in 2000 • Expanded Geographic Service Area in 2007 • Now serving 46 Michigan counties and 5 border counties of Wisconsin

  3. CDFI Role as a “Mission Lender” • Alternative Lending • Loans that banks can’t do, won’t do or shouldn’t do • Use the same criteria…..however story, character and evidence of commitment weigh into our lending decisions • Majority of our loan referrals come from banks • They are able to keep a deposit relationship • Monitor progress of the business • Fund that business once established and growing

  4. Our Loan Offerings • Microloans $4,000-$50,000- Often early stage or first time business owners; terms of up to 7 years supported with technical assistance • Participations and Subordinations- Loans made in connection with a bank where risk is shared and additional financing is needed to support new equipment, expansion or growth • SBA 7A Community Advantage loans- Loans of up to $250,000 with a government guarantee, allowing for longer term financing • USDA Business and Industry Loan Guarantees- Loans up to $2M with longer term financing.

  5. We are An Alternative Lender • We are Not A Concessionary Lender Rates are not lower, terms are not sweeter, grants are not available • We seek all of the same information that a bank would seek • We are interested in job creation and business growth To that end we can often support a business with technical assistance, business coaching and access to business development information to help a business build strong operating systems

  6. Our Results • We have made over $40,000,000 in loans • We have written over 700 loans • About 30% of our loans are to start up, first time business owners • About 40% of our loans are to women owned businesses • Around half of our loans are less than $50,000 • We currently have around 160 borrowers in our loan portfolio

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