September 18, 2015
Last week the U.S. Department of Treasury’s Community Development Financial Institutions (CDFI) Fund announced its latest round of awards for three programs: the CDFI Program, the Native American CDFI Assistance (NACA) Program, and the Healthy Food Financing Initiative (HFFI). The $224 million awarded to the 206 CDFIs around the country invests in and builds the capacity of community credit unions, banks, loan funds, and other financial institutions serving rural and urban communities that lack adequate access to affordable financial products and services.
Of the total amount awarded, $22 million was awarded through HFFI, which aims to increase the availability of healthy food in low to moderate-income under-served communities through the creation and expansion of healthy food retail outlets such as grocery stores, farmers markets, and coops in rural, urban, and suburban areas. In addition to retail projects, the CDFI Fund’s HFFI program can also be used for healthy food access projects that are not specifically retail – such as food hubs, community kitchens, and food production facilities.
NSAC congratulates all the awardees and applauds the Treasury Department’s work to assist CDFIs who are on the “frontlines of economically distressed communities, providing needed capital and credit,” according to CDFI Fund Director Annie Donovan. The CDFI Program, the oldest of the three, first launched in 1996, when 31 CDFIs received $35.5 million from the very first CDFI Program awards.
Though no description of the award recipients and project types is available at this time, the full list of the recipients of all three programs is available here.
In particular, we congratulate the following two NSAC member groups who received CDFI Fund awards:
The Center for Rural Affairs’ Rural Investment Corporation
As a relatively new CDFI, the Rural Investment Corporation (RIC), based in Lyons, Nebraska and affiliated with the Center for Rural Affairs, has been steadily increasing its financing products and services over the 3 years it has been in operation, with an eye towards serving rural communities in areas beyond Nebraska and with a greater selection of products to assist farmers. RIC has received a CDFI financial award, a $123,044 Technical Assistance award that will help RIC examine the potential for serving communities in Iowa, Kansas, and South Dakota, and the options for expanding into servicing agricultural loan products.
Until now, the majority of RIC’s financing has assisted small businesses, including a few value-added businesses.
“Eventually though, we would like to serve agricultural communities that are limited in their access to credit, such as beginning, organic, or socially disadvantaged farmers,” says Jeff Reynolds, RIC’s Chief Operating Officer.
RIC has provided $2 million in loans since 2012 and that number is expected to grow in the coming years.
“There is a great need in rural communities for financial resources to start small businesses, including farms. Funding from the CDFI Fund will help us determine how to best fill the gap,” says Reynolds.
Another CDFI serving rural communities is California FarmLink, based in Central California. With its $300,000 Small and Emerging CDFI Assistance (SECA) award, California FarmLink plans to improve its products and services for its target market of small, low-income, beginning, and immigrant vegetable and strawberry farmers, many of whom are first time borrowers. Although California crops are typically high value and capital intensive, there are few sources of small loans available to low-income and beginning farmers. Meanwhile, Latino farmers, who make up 70 percent of California FarmLink’s borrowers, not only lack access to business capital, but lack access to management services and are the least likely group to access USDA programs and resources.
The CDFI Fund’s SECA award will help to expand both microlending and larger commercial farm loans, implement a farm mortgage program, and increase FarmLink’s capacity to assist growers in credit and business management. In a recent study conducted by FarmLink, lack of access to land loans was found to be a primary issue facing small farmers. The farm mortgage program will build upon FarmLink’s existing Land Access program that links farmers with land and helps growers facilitate land leases and purchases.
Financing Options for Small, Beginning, and Socially Disadvantaged Farmers
As recognized by California FarmLink, access to credit and to affordable farmland are some of the biggest barriers new, small, minority, and military veteran farmers face when looking to farm. The U.S. Department of Agriculture’s (USDA) Farm Service Agency (FSA) has several programs that can help with purchasing land, such as the Down Payment Loan Program and Direct and Guaranteed Farm Loan Program. Other USDA programs, such as Microloans and the Farm Storage Facility Loan Program can help farmers with equipment and other investments required for their operations.
Between these programs, several of which have had positive changes announced by USDA in recent months regarding farm storage financing, and increasingly available financing options for CDFIs, the uptick in available resources for farmers has been encouraging.
As USDA plans for the development of the Healthy Food Financing Initiative program established in the 2014 Farm Bill (but which currently lacks any appropriated funding), we urge USDA to consider how the program can help farmers and others in the supply chain with improved access to capital to serve low-income, underserved consumers.