CDFI credit union rising

The unprecedented pandemic related stimulus money that has been approved for the CDFI Fund has created a historic response from credit unions. Existing CDFI credit unions are stretching to expand their community development and outreach programs. Many more low-income designated credit unions are pursuing CDFI certifications in pursuit of greater community outcomes and of course grant awards to fund them.

Having been actively engaged, working with CDFI’s for the past 12 years, I can tell you that grant funding is a beautiful thing. However, receiving CDFI certification and grant funding, usually up to $1 million, only scratches the surface of the potential. The purpose of this article is to share a CDFI best practice that demonstrates how CDFI credit unions can be much more collaborative, attract a higher level of funding, expand impacts and more effectively respond to dynamic community needs and challenges.

Responding quickly to a large and emerging community challenge

During the Pandemic, a group of CDFIs, Government and local non-profits gathered to find a solution for overlooked and struggling small businesses in Miami-Dade County. Over a period of six months, the Miami-Dade Fund (RISE) grew from an idea to a diverse coalition working to establish an effective team to deliver technical assistance, advice, and much-needed capital to Miami-Dade County’s hard-to reach small businesses.

RISE emerged in a time of great need, but the coalition’s lenders, funders and leaders behind its creation believed there was an opportunity for this initiative to be a long-term solution to help small businesses grow long after the pandemic subsides.

The Miami-Dade Board of County Commissioners seeded the RISE program through a $25 million allocation, stemming from its federal CARES Act Coronavirus Relief Fund allotment. As a public-private partnership, Dade County Federal Credit Union (DCFCU), a local, leading CDFI with more than 80 years of community lending experience, administered the RISE program.

The program prioritized three things:

  • Low barrier to entry through a simplified application process and accessible loan terms
  • Embedded, individualized support provided by local CDFI partners
  • Low interest rate (3.25%), multiyear repayment period, and a 12-month grace period.

Notably, RISE was designed to serve the true, local small business community that is typically not connected to large, commercial banks. In order to be eligible, a small business had to meet the following criteria:

  • Have less than 20 employees
  • Generate less than $5 million in annual revenue
  • Be located and operate within Miami-Dade County
  • Be in business for at least two years

Making it happen

As a CDFI, Dade County Federal Credit Union played a critical role from the beginning. MichaelJohn Green, Vice President, Fund Director, hit the ground running with other community partners to address this emerging and potentially devastating challenge that faced local small businesses. 

RISE’s success in part stems from its ability to bring together a diverse group of stakeholders to lead and execute this new program.

Three local non-profit Community Development Financial Institutions (CDFIs) — Miami Bayside Foundation, Black Business Investment Fund (BBIF), and Ascendus (formerly ACCION East) — were key to this initiative. Leveraging their deep connections to minority small businesses, these organizations formed a powerful and effective partnership with DCFCU to screen and process applications and assist small business owners through the loan application process.

To increase contact with hard-to-reach small business owners to explain the program (many of whom face language barriers and are immigrants), the Miami-Dade County Commissioner funded the Urban Impact Lab (UIL), to implement an innovative data-driven business outreach program to drive loan applications and dollar distribution with door-to-door outreach. UIL’s outreach effort, coupled with strategic media engagement drove an increase in RISE applications from 16 to more than 100 per day, coming from all parts of the county.

Results and Outcomes

  • $20 million in loans to 900 underserved and overlooked small businesses (supporting 4,500 families)
  • 88% of RISE recipients had not accessed technical assistance for the two years prior to the pandemic
  • 39% were woman-owned businesses
  • 74% were Hispanic/Latino, 10% African American/Black
  • 16% of the funds were issued to businesses where owners are permanent U.S. residents or green card holders
  • Equitable distribution of funding countywide

Small business owner outcomes

“As the owner of Miami Salons for more than 30 years, this loan came at a critical moment. I had applied for a slew of other relief programs and none had come through but RISE. This saved my business and Job. I am forever thankful. “ – Maria Don Vega – The Mall Hair Salon

“RISE was huge for me as an independent owner operator. It was hectic, PPP and EIDL did help but with me as the only employee this program was better suited for me and helped me keep the machine running and the lights on.”  Keith Lorren – The Spice King 

Lessons learned

While it provided immediate relief, RISE is designed to be a long-term revolving loan program.

The coalition is now working to bring its next phase to life, as an engine for growth in Miami-Dade’s small business community. With data collected from loan applications and interpreted by DCFCU and Urban Impact Lab, RISE moves forward with specific recommendations for helping small businesses county-wide, and for ways to restructure RISE for maximum impact. 

DCFCU had the strategic foresight to pursue CDFI, and to recruit a CDFI experienced and passionate community development leader to run its community development department. When the Pandemic hit, DCFCU was ready to hit the ground running, with existing partnerships, products and programs that resulted in $25 million in funding to expand inclusive, diverse and equitable lending through the Miami Dade County area. This level of community cooperation and funding far exceeds an annual CDFI grant award of $1 million. This is a best practice example of how CDFI credit unions can think and act big, maximizing the credit union brand and provide solutions to local community needs.  

DCFCU’s Michealjohn Green sums up RISE and the opportunities for CDFI’s well.  “Having worked for and started a few non-profit CDFI’s this program was a watershed moment for me in community impact. Credit Unions have the back office, employees, financial services and most importantly the mission alignment to non-profit CDFI’s. When working hand in hand our reach and impact is multiplied. Partnerships are key in any community development but credit union CDFI and non-profit CDFI’s are uniquely qualified when working together to penetrate and serve low- and moderate-income communities.”

If you would like to learn more about this program, please reach out to MJ Green Michaeljohn.Green@dcfcu.org.

Scott Butterfield

Scott Butterfield

Scott is the Principal of Your Credit Union Partner, PLLC. Your Credit Union Partner (YCUP) is a trusted advisor to the leaders of more than 100 credit unions located throughout ... Web: www.yourcupartner.org Details

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