By Duane Adams –
Are you looking for money to start or maintain your business?
If so, you may already know that leveraging debt is one way that you can acquire funds. Of course, every business owner would like to receive “free money” through a grant, but grant funds are few and far between and typically come in relatively small increments. Most for-profit businesses that receive grants are still forced to take on debt at some point.
Once you have done the proper due diligence and feel that you are able to evaluate lending options, you should speak with a commercial and/or traditional lender about financing. These institutions typically offer lower interest rates upon approval.
The drawback with these lenders is the lack of flexibility in working with early-stage businesses. Lenders typically evaluate a business’s historical financial data, credit score, how much money the business is currently generating, the business’ assets, industry growth and stagnation, and the team, as well as any existing debt. These banks can also be finicky when it comes to investing in industries that they are not familiar with.
If you discover that you are not able to take on a loan through a commercial bank or traditional lender, a Community Development Financial Institution (CDFI) may be able to provide the perfect funding solution for your business.
Community Development Financial Institutions (CDFIs)
CDFIs are specialized organizations that provide financial services in low-income communities and to people who lack access to funding. They work to empower low-income and underserved people and communities to enter the financial mainstream. CDFI is a designation given by the CDFI Fund.
What Types of Activities Do CDFIs Finance?
CDFIs finance a wide range of activities, including mortgage lending for first-time homebuyers, flexible underwriting to community facilities, and commercial loans for…
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