Partners (Spring 1999)
Partners (Spring 1999)
Sixth District Organizations Selected for
Funding under the CDFI and BEA Program
by Sibyl Howell
The Community Development Financial Institution (CDFI) program was established by the Riegle Community Development and Regulatory Improvement Act of 1994 and is administered by the US Department of Treasury CDFI Fund. The Fund was created to expand the availability of credit, investment capital, and financial services in distressed urban and rural communities.
The CDFI fund provides relatively small infusions of capital to institutions that serve distressed communities and low-income individuals. The Fund's activities leverage private-sector investments from banks, foundations, and other funding sources.
CDFIs are specialized financial institutions that work in market niches to provide a wide range of financial products and services, including mortgage financing for first-time home-buyers, financing for needed community facilities, commercial loans and investments to start or expand small business, loans to rehabilitate rental housing, and financial services needed by low-income households and local businesses. In addition, these institutions provide services that help ensure that credit is used effectively, by providing such services as technical assistance to small businesses and credit counseling to consumers. CDFIs include community development banks, credit unions, loan funds, venture capital funds, and microenterprise loan funds.
The CDFI program has three separate components: the Core Component, the Intermediary Component, and a new Technical Assistance Component. The core component is the Fund's main program under which CDFIs, or entities proposing to become CDFIs, may apply for financial and technical assistance. The intermediary component is created specifically for intermediaries who focus primarily on the financing of other CDFIs. A new Technical Assistance Component was designed to better meet the unmet capacity needs of CDFIs, or entities proposing to become CDFIs, who have significant potential for increasing their community development impact.
Congratulations to the following Sixth District organizations that received grants from the Community Development Financial Institutions Fund in 1998:
Demopolis Federal Credit Union
$25,000 Technical Assistance Grant
Demopolis Federal Credit Union provides affordable financial services and access to credit to low-income, and predominately African-American, neighborhoods in Demopolis, Alabama. CDFI Fund technical assistance will enable Demopolis FCU to obtain staff and board training in marketing strategies, market assessment and expansion, and general credit union management.
Neighborhood Housing and Development Corporation
$42,500 Technical Assistance Grant
Neighborhood Housing & Development Corp. (NHDC) is a nonprofit that develops and provides affordable housing for low-income residents of Florida's Alachua and Marion Counties. NHDC seeks to expand its Marion County activities and requires an upgrading of its loan underwriting and monitoring systems. The Fund's $42,500 grant will help cover the costs of networking the organization's computer system; training staff members in accounting, financial management, and underwriting; developing a lending strategy specifically tailored to Marion County needs; and devising a capitalization strategy for the organization.
Stillman County Development Federal Credit Union
$25,000 Technical Assistance Grant
Stillman Community Development Federal Credit Union promotes the financial well-being of its members by providing financial services to the low-income residents of Tuscaloosa, Alabama. The CDFI Fund technical assistance grant will enable Stillman Community Development FCU to obtain board training in financial responsibilities and staff training in the design and implementation of new consumer lending products.
Union Fidelity Fund, Inc.
Belle Glade, FL
$35,000 Technical Assistance Grant
Union Fidelity Fund, Inc. (UFFI) of Belle Glade, Florida was awarded a $35,000 technical assistance grant from the CDFI Fund. UFFI, a start-up organization, provides financial assistance to low and moderate income families and individuals for the purchase of homes or for the start of new businesses. Support from the CDFI Fund will be used to purchase needed software and hardware and for the training of staff and board on all aspects of loan underwriting, processing, and monitoring, and the development of operating policies and procedures.
Although lesser known than the CDFI program, the Bank Enterprise Award (BEA) program was also established by the Riegle Community Development and Regulatory Improvement Act of 1994 to help revitalize distressed urban and rural communities by helping to create new jobs, promote small businesses, and build affordable housing. The BEA is administered by the Treasury Department's Community Development Financial Institutions (CDFI) Fund.
The BEA Program is designed to provide assistance to financial institutions to promote investments in community development financial institutions and to facilitate the availability of lending and other financial services in economically distressed communities.
The Program recognizes the important role that financial institutions have traditionally played, and should continue to play, in serving the credit needs of distressed communities. The BEA Program will build partnerships between specialized lenders and encourage them to expand their loans and other services to distressed communities.
Congratulations to the following Sixth District financial institutions that received BE awards in 1998:
Hibernia National Bank
New Orleans, LA
Hibernia National Bank, of New Orleans, Louisiana, was awarded $406,428 for increasing its single-family mortgage lending and consumer lending in a distressed community in New Orleans. As part of the award, Hibernia National Bank was awarded $345,000 for making an equity investment in the Enterprise Corporation of the Delta Investments, LLC and making a loan to the Local Initiatives Support Corporation.
NationsBank, NA was awarded $1,252,500 for carrying out CDFI related activities. The bank made a $100,000 equity investment in Enterprise Corporation of the Delta, a certified CDFI, in Jackson, Mississippi. In addition, the bank has made loans totaling $11,750,000 to First State Community Loan Fund, Unitarian Universalist Affordable Housing Corporation, Ethiopian Community Development Council, Self-Help Venture Fund, The Enterprise Foundation and Enterprise Corporation of the Delta.
Oceanmark Bank, FSB
North Miami Beach, FL
Oceanmark Bank, FSB received an award of $26,497 for increasing its consumer, single-family, and small business lending in the economically distressed Miami neighborhood of Liberty City. The bank is also in the process of constructing a new branch in the neighborhood.
Planters Bank & Trust
Planters Bank and Trust Company, of Indianola, Mississippi, was awarded $3,750 for making $25,000 equity investment in the Enterprise Corporation of the Delta Investments, LLC (ECDI). ECDI is an affiliate of the Enterprise Corporation of the Delta, a certified CDFI.
SunTrust Bank, Atlanta
SunTrust Bank, Atlanta received an award of $245,660 for increasing its lending for single and multi-family construction and renovation in distressed areas of Atlanta. The projects financed include construction of 16 affordable townhomes and renovation of an old factory into rental apartments.
SunTrust Bank, Tampa Bay
SunTrust Bank, Tampa Bay received an award of $27,500 for making a loan of $250,000 to Florida Community Loan Fund, a certified CDFI based in St. Petersburg. The below market rate loan will be used by Florida Community Loan Fund to support microenterprise development in distressed areas of Hillsborough and Pinellas counties, as well as in distressed communities in Tampa and St. Petersburg.
For information about the CDFI program, the Bank Enterprise Award program, or the next application cycle, contact the CDFI Fund at (202) 622-8662 or view the CDFI Fund website, www.treas.gov/cdfi.
* BEA awards and awardees information is provided by the US Department of Treasury, Community Development Financial Institution Fund.
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