U.S. Department of Energy Energy Efficiency and Renewable Energy

Small Businesses Working with Community Development Financial Institutions

Other financing sources for small businesses include Community Development Corporations (CDCs) and Community Development Financial Institutions (CDFIs). Many of these entities operate revolving loans funds, which they will consider using to make loans for energy efficiency and renewable energy building improvements.

According to the Coalition of Community Development Financial Institutions, there are more than 850 CDFIs in the United States. CDFIs “serve economically distressed communities by providing credit, capital, and financial services that are often unavailable from mainstream financial institutions. CDFIs have loaned and invested over billions [of dollars] in our nation’s most distressed communities.” (Source: CDFI Coalition website).

For tables presenting a detailed comparison of the six CDFI types, see Comparing Different Types of CDFIs on the CDFI Coalition website.

CDFIs have experience in originating, underwriting, and/or servicing loans. As such, they could serve as partners to help manage and administer American Recovery and Reinvestment Act (ARRA) grant funds when establishing a revolving loan fund. In addition, they may be able to help leverage ARRA funds through participation agreements with other sources of capital with which they have existing relationships, supported by loan loss reserves and interest rate buy downs.