Small Business Lending: What is a CDFI?

When most business owners think of a bank or lender, they likely think of a traditional financial institution like JPMorgan Chase or Bank of America. But for small businesses looking for lending, these institutions might not be the best option. That's where Community Development Financial Institutions (CDFI) come in.

This guide will explain what a CDFI is and how they can help small businesses get the funding they need to grow. So if you're curious about this type of lending institution, keep reading!

Related reading: How to get Funding for Your Business

What is a Community Development Financial Institution (CDFI)?

CDFIs are small business lenders that are focused on helping underserved communities and businesses that might not otherwise have access to financing. They're often nonprofits and use their funding to provide loans, investments, and financial services to small businesses in low-income areas. Because of their mission to help small businesses succeed, CDFIs often offer more flexible terms and lower interest rates than traditional lenders.

CDFIs are mission-driven and have been certified by the U.S. Department of the Treasury’s CDFI Fund. CDFIs include credit unions, banks, loan funds, and venture capital funds that operate with a primary mission of serving underserved communities. So if you're a small business owner looking for financing and have been turned away by traditional banks, consider turning to a CDFI.

How are CDFIs Different from Traditional Lenders and Banks?

CDFIs are different from traditional banks and lenders in several ways.

1. CDFIs are mission-driven

Community Development Financial Institutions (CDFIs) are lenders that are focused on providing financing to underserved communities. Unlike traditional banks and lenders, CDFIs are mission-driven and are typically non-profit organizations. This means they are more likely to provide financing to businesses and individuals who may not otherwise qualify for a loan.

2. CDFIs offer flexible financing

CDFIs also offer flexible financing options that can be tailored to the needs of the borrower. For example, a CDFI may be willing to provide a loan with a lower interest rate or longer repayment terms than a traditional lender. This can make it easier for borrowers to repay their loans and ultimately succeed in their businesses.

3. CDFIs invest in underserved communities

Another key difference between CDFIs and traditional lenders is that CDFIs invest in underserved communities. By providing financing to businesses and individuals in these communities, CDFIs help to create jobs and spur economic development. This can have a positive impact on the overall health of the community.

4. CDFIs are regulated by the US government

CDFIs are regulated by the US government through the Community Development Banking and Financial Institutions Fund (CDFI Fund). The CDFI Fund provides financial and technical assistance to CDFIs to better serve their communities.

As a result of these differences, CDFIs play an important role in small business lending and have a strong track record of success in facilitating economic development in underserved communities.

What Types of Loans do CDFIs Offer?

Depending on the CDFI, there are a variety of loans that they offer to small businesses. The type of loan offered depends on the purpose it will be used for, but some common loan types that CDFIs offer include:

  • Microloans

Microloans are aimed at providing funding for smaller business initiatives, from reviving a failing campaign to launching a new product line.

  • Working Capital Loans

Working capital loans are designed to cover short-term expenses that may appear during durations where revenue has temporarily taken a hit.

  • Equipment Loans

Equipment financing is exactly what it sounds like; funds needed to obtain necessary items such as machinery or tools.

Where can I Search for a CDFI Lender for my Small Business?

Some CDFI lenders are only able to operate in specific states or regions, so you will want to find one that can meet your business's requirements. Here are a few places you can use to find a CDFI lender:

Fundid's Capital Marketplace

Fundid's Capital Marketplace has a list of lenders who are ready to serve small business owners like you! Create your free account to start searching for a lender that fits your business's needs.

CDFIs that Fundid Partners with:


MoFi offers term loans, lines of credit, equipment financing, and asset purchase for businesses. They fund startups, existing businesses, and business purchases. MoFi believes that equal access to responsible, flexible capital is fundamental to creating individual stability, business success, and community prosperity.

You're a great fit for MoFi if your business is based in Idaho, Montana, Oregon, Washington, Wyoming, or Utah and you have a 600+ personal FICO score.

Accion Opportunity Fund

Accion Opportunity Fund is a non-profit financial support system that provides business owners – predominantly entrepreneurs of color, immigrants, and women - with access to capital, networks, and coaching. 

AOF working capital loans can be used for purchasing equipment, inventory, hiring new staff, advertising, and much more to grow your business.

AOF working capital loans are ideal for small businesses and sole proprietors that meet the following criteria:

  • At least 1 year in business
  • Annual revenue of at least $50,000
  • Located in all U.S. states except: Montana, Vermont, Tennessee, North Dakota, South Dakota, and the District of Columbia.

Opportunity Finance Network

The Opportunity Finance Network has a searchable database of CDFIs so that you can find a CDFI lender for your small business.

Find a Lender for Your Small Business

There are many factors to consider when looking for a small business lender. Do they serve your state or region? Do you meet their minimum requirements? Do they offer the funding type your business needs? Visit our Capital Marketplace in our free platform to search through lenders that are looking to serve small businesses!