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All CDFIs invest in unbankable people, but every CDFI is different. This diversity is one of the strengths of the industry, but it can make it difficult for a potential borrower to find the right institution to apply to. If you are interested in a loan, there are several things to consider.

Finding an appropriate institution
What if they say 'yes'?
What if they say 'no'?
 

Finding an appropriate institution

  • Find an institution that can do business with you. Credit unions lend only to their members. Venture capital funds lend only to larger businesses. Microloan funds lend only to very small businesses. Some CDFIs lend only to community organizations.
  • Find an institution that makes the types of loans you are interested in. Every CDFI has its own priorities. Read more about the various lending purposes of different types of CDFIs in Loans.
  • Look at the list of national organizations of CDFIs listed in Resources to help you find the right institution.
 

What if they say 'yes'?

  • Repaying a loan:
    A loan from a CDFI must be repaid with interest, just like a loan from a bank.
  • Developing a trusting relationship:
    If a CDFI is ready to take the risk of lending to you, you need to take the risk of being open and honest about financial or personal difficulties that may effect your ability to make payments.
  • Seeking technical assistance:
    Most CDFIs offer advice and/or training——known as technical assistance——to business borrowers who lack basic business knowledge and experience. Technical assistance can include training in bookkeeping, marketing, or any other aspect of running a company.

"You want to have experienced people helping slightly inexperienced entrepreneurs. But it's not just the provision of technical assistance. It's creating a relationship with a borrower so they're very comfortable picking up the phone and saying, "I'm failing. I'm not going to be able to pay you," and trying to convey the honest reasons why that's the case. That's a very unusual relationship to have with your banker."

Patty Grossman, Cascadia Revolving Fund
 

What if they say 'no'?

  • CDFIs don't say yes to everyone: Although they are committed to lending to people who don't meet the criteria of regular banks, they do evaluate the ability of an individual or a business to repay the loan. Not only do CDFIs need to protect their investors' money, they don't want to encourage people to pursue plans that have little chance of success.
  • Preparing to reapply:
    When a CDFI does say no, they usually tell you what you need to do to qualify. This can include clearing up old debts or preparing a better business plan.

"There are lots and lots of people that I would have loved to have helped, based on their character. But I just knew, based on their business ideas, their financial projections, and the state of the economy, they would fail. It's not a favor to anybody to set someone up to fail."

Patty Grossman, Cascadia Revolving Fund