CDFIs can be a great option for small and medium-sized businesses (SMEs), especially if you don’t have a long financial history or traditional collateral.  They take a broader look at your business to better understand your creditworthiness and potential for success.

What is a Community Development Finance Institution (CDFI)?

A CDFI is a non-profit lender that helps businesses by offering loans and support through a personal, relationship-based approach.

Loans are repaid with interest and any agreed fees over a set period. CDFIs typically lend between £25,000 and £250,000, though some offer smaller loans starting at £1,000 or larger ones over £250,000.

How do CDFIs work?

When you apply for a loan, a CDFI relationship manager will guide you through the process. They’ll review your application, which usually includes information like your business plan and annual accounts.

They’ll also take time to understand your business and may consider the social benefits of your loan, such as creating jobs.

What are the benefits of a CDFI loan?

CDFIs can be a great option for businesses that find it hard to access finance elsewhere. Benefits include:

• Approving loans for businesses that may have been declined by other lenders.
• Supporting underrepresented businesses, like those led by women or ethnic minorities, and businesses outside city centres.
• Offering mentoring and additional support.
• Letting you keep full control of your business.

What are the risks?

Like any loan, there are risks:

• Missing repayments (defaulting) could affect your credit score.
• You might need to offer business or personal assets as security, which could be at risk if you can’t repay.
• Directors may be asked to sign a Personal Guarantee.

Is borrowing from a CDFI right for me?

CDFIs are open to businesses of all sizes, sectors, and stages. They also deliver the Start Up Loans programme by the British Business Bank.

Before borrowing, consider:

• Can I afford the repayments?
• What interest rate will I pay?
• When will I need to repay?

Enter the details requested below to see a list of CDFIs who might be able to help your business.