One of our most engaging pages last month featured a link to our mission-driven lender locator map. It’s not a surprise that the resource caught our followers’ eyes, as gaining access to capital is not exactly smooth sailing for most small businesses. Approximately 4 in 10 small businesses with less than $1 million in annual revenue were denied financing at small banks, and more than half were rejected at big banks, according to the 2016 Federal Reserve Small Business Credit Survey. And it can be even more difficult for women and minority-owned businesses. Women entrepreneurs start companies with 50% less capital than male entrepreneurs, and minority business owners are denied loans at nearly three times the rate of non-minority owners.
The good news is that mission-driven lenders, often called community development financial institutions (CDFIs), are organizations that are truly committed to working with communities that traditional financial institutions historically have not or could not serve. Many of these mission-driven lenders are certified as CDFIs by the Treasury Department’s CDFI Fund. To earn the CDFI certification, a mission-driven lender must have a primary mission to promote economic development and provide products or services to an underserved area or population. CDFIs seek to level the playing field, not just with affordable loans, but also with the education, counseling and support that small business owners need to succeed. We recently heard from four small business owners who shared the impact that mission-driven lenders had on their businesses:
TIP: Check out the features and considerations of a mission-driven loan here.
To apply for financing, small-business owners can find a CDFI in their area by using our mission-driven lender locator map. Small businesses will generally will need to provide the same information needed for a bank loan: personal and business tax returns, personal financial statements, lease agreements, bank statements, income statements, and balance sheets. CDFI staff can help walk you through every step, answer any questions you may have, and make sure you understand loan offers and terms, so you can access the capital you need and borrow confidently.