Reinvestment Alert 21: Impacts of CDFIs in Illinois: A Case for an Improved Illinois Fund for Invest

May 13, 2003 | by
  • Description

Illinois is home to an active and established community development financial institution (CDFI)industry with a successful track record of providing financial services in economically disadvantagedmarkets and underserved communities. CDFIs stimulate the local economy by creating jobs, building housing, and leveraging private resources for reinvestment. CDFIs include nonprofit loan funds, credit unions, community banks, small business lenders, and venture capital funds. Although diverse in corporate structure, CDFIs share the common mission of providing affordable financing options that broaden access to capital. CDFIs offer services with rates, terms, and products tailored to meet their clients' needs. While the young industry is very successful, CDFIs need new sources of capital in order to expand. In January 2003, Illinois became the fourth state in the nation to enact a law creating a comprehensive state-based program—the Illinois Fund for Investment and Development—(IFID) to support the CDFI industry. However, IFID is currently unfunded. This Alert serves to advocate for funding for IFID in order to assist the vital CDFI industry in Illinois. CDFIs offer a range of customized and innovative financing options to businesses, individuals, nonprofits, and religious institutions facing barriers in obtaining access to traditional sources of capital. Examples of innovative financial products include venture capital funds providing start-up capital in the form of equity investments to entrepreneurs desiring to create new businesses; community banks offering individuals and businesses affordable checking and savings accounts or providing commercial loans; loan funds providing financing for affordable housing development and community institutions; and small or micro business lenders providing financing for the creation or expansion of businesses. In addition to financial services, CDFIs provide extensive training and targeted technical assistance to help clients meet their financial goals. Technical assistance services offered by CDFIs include business counseling, strategic planning, financial management, homebuyer training, asset management, and training seminars. The mission of the new public-private partnership known as IFID is to enhance the capacity of Illinois' CDFI industry through the following mechanisms:

· Creating new CDFIs throughout Illinois

· Expanding CDFI services and markets

· Attracting more public-private partnerships in community economic development