We Create Capital: KCMO CDE Attains CDFI Designation
In July, the CDFI Fund of the U.S. Department of the Treasury approved the KCMO CDE for community development financial institution (CDFI) status. With this designation, the KCMO CDE becomes the only Kansas City- and mission-based CDFI serving economically distressed target markets throughout Kansas City, Missouri.
This is good news for Kansas City's small business owners and entrepreneurs.
In We Create Capital
, KCSourceLink and our Resource Partners, like KCMO CDE, pinpointed CDFI certification as one of our action steps to increase regional microlending, with a goal of bringing more than $10 million in the next fiver years. With this KCMO CDE's certification, we're taking critical steps toward that goal.
“The CDFI designation is a game changer for the KCMO CDE and Kansas City,” said Ruben Alonso III, executive director of the KCMO CDE. “We have worked hard to position the organization for this designation and are excited about the resources we will be able to access and opportunities those resources will create to further our mission to provide alternative financing tools to support critical investments in Kansas City’s most economically challenged communities.”
The Role of KCMO CDE in Alternative Financing
To date, the KCMO CDE has operated as a 501c4 community development entity providing nontraditional, alternative financing to support job creating and catalytic investments throughout Kansas City, Missouri’s most economically distressed communities. Its main financing tool has been the New Markets Tax Credit (NMTC) Program, which it has used to help finance nearly $120 million in capital investments by operating businesses as well as real estate development projects. The CDE has also helped to provide commercial real estate loans through its façade improvement loan program as well as small business loans through partnerships with micro-lenders such as Justine PETERSEN.
As a newly certified CDFI, the CDE will be able to greatly expand its lending activity to address capital gaps in the market, furthering investment, job creation and economic development and growth opportunities in historically underinvested and under resourced communities throughout Kansas City, Missouri.
What Is a CDFI?
Community Development Financial Institutions (CDFIs) are private-sector, financial intermediaries with community development as their primary mission. Although CDFIs share a common mission, they have a variety of structures and development lending goals.
The CDFI Fund was established by the Riegle Community Development and Regulatory Improvement Act of 1994 to promote economic revitalization in low-income communities. The purpose of the CDFI Fund is to use federal resources to invest in CDFIs and to build their capacity to serve low-income people and communities that lack access to affordable financial products and services. The CDFI Fund provides two types of monetary awards to CDFIs - Financial Assistance awards and Technical Assistance awards. CDFIs may use the funds to pursue a variety of goals, including:
- To promote economic development, develop businesses, create jobs and develop commercial real estate;
- To develop affordable housing and to promote homeownership; and
- To provide community development financial services, such as basic banking services, financial literacy programs and alternatives to predatory lending.
A certified CDFI is a specialized financial institution that works in market niches that are underserved by traditional financial institutions. CDFIs 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, flexible underwriting and risk capital for needed community facilities, and technical assistance, commercial loans and investments to small startup or expanding businesses in low-income areas.
CDFIs include regulated institutions such as community development banks and credit unions, and non-regulated institutions such as loan and venture capital funds.
For more information about the KCMO CDE's CDFI designation
, please contact Ruben Alonso III
For more information on CDFIs and how KC plans to increase access to capital for our entrepreneurs
, download We Create Capital