Monday, 4 November 2019
Low-income areas often struggle to attract outside investment, since some investors consider businesses too risky for financing.
Residents also may have low-paying jobs, credit problems and difficulty qualifying for banking services.
Even local governments and community groups find it hard to borrow money for projects that would spur economic growth and opportunity.
Without outside investment, these communities sometimes struggle to grow and attract new business. People who live in these areas often face unemployment and low-wage jobs, making it hard for them to improve their quality of life.
CDFIs are private financial companies that provide economic, technical and educational support to low-income communities. They use their own funds, as well as private and government funding, to strengthen local economies, spur job growth and improve the overall quality of life in distressed areas.
Finding affordable housing can be a huge challenge for low-income individuals and families. Even those who find housing often spend the majority of their paycheck on rent, leaving little for food and other necessities.
Through the Community Housing Development Program, CDFIs can offer local housing authorities and builders low-interest loans to develop affordable multi-family and elderly housing in poor communities.
Texas-based People Fund, a CDFI supported by BBVA through donations and volunteer efforts, provides loans and support for companies and organizations unable to qualify for traditional funding.
Through their lending programs, People Fund helps small businesses and non-profit groups purchase equipment and real estate, and gives them access to working capital and lines of credit.
Since its founding in 1994, People Fund has invested nearly $74 million in small businesses, startups and non-profit groups, and supported the generation of nearly 6,300 jobs in low-income Texas communities.
Faced with mounting pressure to cut costs, many health care companies have closed primary health centers in rural and low-income areas, leaving residents without access to quality primary and preventative care.
Primary Care Development Corporation uses CDFI funding to provide loans to local primary care providers in poor communities. Since their founding in 1993, the corporation has assisted over 3,500 health-related sites, created or preserved over 13,000 jobs, facilitated 3.8 million primary care visits and leveraged $1.1 billion for low-income communities.
CDFIs have access to many financial and technical resources to support investment and development in low-income communities. From financing affordable housing, to upgrading local fire departments, to lending to small business, CDFIs have had a dramatic impact on communities throughout the U.S. and will continue to do so for the foreseeable future.
BBVA realizes the impact CDFIs have on economically challenged areas and recently passed $100 million in investments in CDFIs in the U.S., reaching this goal months ahead of the original target date.
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