$10M awarded to 7 Maine community development financial institutions
Posted on June 17, 2021 | Success Stories
T
he federal government has awarded $10.6 million to seven community development financial institutions, or CDFIs, around Maine.
The money, from the U.S. Treasury Department’s CDFI Rapid Response Program, is part of a total of $1.25 billion in relief funds to 863 CDFIs nationwide, according to a news release.
The awards are expected to allow CDFIs to respond to economic challenges created by the pandemic, particularly in underserved communities.
Most of the Maine CDFIs received $1,826,265, the maximum amount awarded by the rapid response program. They were Genesis Fund in Brunswick, Coastal Enterprises Inc. in Brunswick, Lewiston-based Community Credit Union, Four Directions Development Corp. in Orono, and Northern Maine Development Corp. in Caribou.
Bangor-based Eastern Maine Development Corp. received $367,000 and MaineStream Finance in Bangor received $1.105 million.
Small business owners
The money can be used for financial products and services, business development services, operational capacity, and capital and loan-loss reserves, enabling CDFIs to help businesses and communities to recover economically.
“Diverse small business owners, entrepreneurs, and leaders of community facilities like child care centers need to be part of the team rebuilding an equitable economy in the months and years ahead,” said Betsy Biemann, CEO of CEI.
“In order to bring back businesses that have fallen on hard times, you don’t just rebuild what you’ve lost,” she said. “You build what you hope to have. These funds will strengthen our ability to help them create jobs, environmentally sustainable businesses and prosperity that everyone can share in.”
CEI is one of the nation’s leading rural CDFIs and, since 1977, has provided $1.46 billion in financing to 3,038 businesses and projects in Maine and rural regions throughout the country.
“The disruption and uncertainty caused by the global pandemic continue to affect pricing, supply and employment, especially in key sectors of the economy, like child care,” said CEI’s president, Keith Bisson. “As we work closely with business owners to help them pivot or start a new venture, we also aim to deepen our mission for long-term impact across industries and regions, positioning them for the future.”
Housing, child care
“This new award will allow us to address the critical need to increase and preserve affordable housing, quality child care and access to food assistance that will be essential to helping our communities recover from the pandemic,” said Liza Fleming-Ives, executive director of the Genesis Fund.
The Genesis Fund makes loans to develop affordable housing and other community facilities like shelters, food pantries, and childcare centers.
The funds will be used to support activities such as financial products, financial services, development services and certain operational activities, and to enable the institutions to build capital reserves and loan-loss reserves. The program was designed to disburse the funds rapidly
Nationwide, primary geographic markets served by awardees include rural and urban areas. A CDFI can be a bank, credit union, loan fund or venture capital fund.
In making the announcement, Treasury Secretary Janet Yellen said that for every dollar injected into a CDFI, it catalyzes eight more dollars in private-sector investment, “meaning that today’s announcement might lead to an additional $10 billion in investment.”
Serving the underserved
CDFIs are mission-driven, community-based financial institutions that often make investments — through loans, venture capital, tax credits and other financial services — that make a positive social and economic impact.
Their financial products and services are targeted at people and communities underserved by conventional financial institutions, particularly in low-income communities. A key support is the U.S. Department of the Treasury’s CDFI Fund, created in 1994 to certify CDFIs and make grants and investments to fund technical assistance and organizational capacity-building.
CDFIs often partner with banks to develop innovative loans, investments and financial services, often jointly funding community projects, with CDFIs assuming the more-risky subordinated debt.