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The Iowa Center Loan Fund receives CDFI Certification

February 21, 2022

The Iowa Center for Economic Success, a nonprofit based in Des Moines, announced last week that its Loan Fund has been certified by the U.S. Department of Treasury as a Community Development Financial Institution (CDFI).

CDFIs are private financial institutions that are dedicated to delivering responsible, affordable lending to help low-income, low-wealth, and other disadvantaged people and communities join the economic mainstream. By financing community businesses — including small businesses, microenterprises, nonprofit organizations, commercial real estate, and affordable housing — CDFIs spark job growth and retention in hard-to-serve markets across the nation.

The Iowa Center has been lending since 2015 but began pursuing CDFI certification in 2021.

In order to be a certified CDFI, 70% of loans given out must serve “target markets.” A target market can be either a historically distressed investment area, a low-income population, or an “other targeted population” (OTP). OTPs are vulnerable or underserved populations that have historically been denied credit or lack adequate access to capital.

“Our philosophy is catching everybody up, making sure that everybody has access to the education, capital, and networking that are vital to having a small business, and there are certain populations that statistically have more catching up to do because they’ve been neglected,” said Megan Milligan, President and CEO of The Iowa Center.

Over the next several months, Milligan and her team will be raising funds to strengthen the loan fund while also serving the ever-growing list of entrepreneurs seeking capital and supportive services.

The Iowa Center’s loan fund is about $250,000 right now but with a CDFI Certification, the center will be able to increase the fund’s size into the millions. Individual loan capacity will increase as well. Currently, loans of up to $50,000 are available. Eventually, the center will offer loans of $100,000 plus, Milligan told Clay & Milk.

In addition to financing, Iowa Center Loan Fund provides access to The Iowa Center’s other services including technical assistance, business classes and coaching, and credit counseling.

“We have our work cut out for us for sure, but what an honor,” said Milligan. “Small business is what makes our state go. We are grateful for these entrepreneurs that run the restaurants that feed us, the daycares that nurture our kids, the services that clean our homes and cut our hair.  We are honored to serve them.”

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The Iowa Center Loan Fund receives CDFI Certification | Clay & Milk
A central Iowa ag-tech accelerator has secured more backers and finally has a name. The Greater Des Moines Partnership first announced the accelerator last year, naming four initial investors. On Monday, the Partnership said the program will be called the "Iowa AgriTech Accelerator" and named three new investors. The new investors include Grinnell Mutual, Kent Corp. and Sukup Manufacturing, all Iowa companies. They join investors Deere & Co., Peoples Co., Farmers Mutual Hail Insurance Co. and DuPont Pioneer. Each investor has agreed to put up $100,000 for the first year of the accelerator. Startups entering the program will receive $40,000 in seed funding in exchange for 6 percent equity. Tej Dhawan, an angel investor and local startup mentor, is serving as interim director until the AgriTech Accelerator names a permanent leader. Dhawan held a similar role with the GIA before Brian Hemesath was named as managing director. As interim director, Dhawan said his main job includes hiring the accelerator's executive director, establishing a business structure and initial recruiting for the first cohort. The accelerator will place few filters, such as location and product, on the applicant pool, Dhawan said. "When you’re seeking innovation, innovation can come from every corner of the world so why restrict ourselves," he said. One area the the AgriTech Accelerator won't recruit from is biotech. For its first cohort, the AgriTech Accelerator will work out of the GIA's space in Des Moines' East Village, Dhawan said. A future, permanent home is still to be decided. The accelerator's program will host startups from mid-July through mid-October, ending with an event connected to the annual World Food Prize. The GIA, which the AgriTech Accelerator is based on, also ends with presentations at an industry event. The accelerator has also started lining up a mentor pool. The Iowa Corn Growers Association, Iowa Soybean Association and the Iowa Pork Producers Association have agreed to provide mentors, as has Iowa State University. While the AgriTech Accelerator is loosely based off of the GIA, it will differ in its business structure, Dhawan said. The GIA runs through a for-profit model for both operations and its investment fund. The AgriTech Accelerator will have a nonprofit model for its operations and a for-profit setup for its fund. Dhawan said the nonprofit model is being used so the accelerator can better work with other nonprofit partners, such as trade associations. "These are all organizations that are nonprofits and can be amazing stakeholders without ever having to be investors in the accelerator," he said. "It becomes easier to work with trade associations in their nonprofit role when we are also a nonprofit." When it's up and running, the AgriTech Accelerator would be one of a handful of ag-focused startup development programs in Iowa. Others include the Ag Startup Engine out of Iowa State University and the Rural Ventures Alliance from Iowa MicroLoan. Matthew Patane is the managing editor and co-founder of Clay & Milk. Send him an email at mpatane@clayandmilk.com.
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