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.”