I had the good fortune in my current business plan course to be exposed to a number of alternative business funding sources. These include a mixture of government, private, and community based enterprises where like-missioned institutions form coalitions designed to bring economic opportunity to underserved entrepreneurs and underinvested markets in low-income communities. These coalitions provide credit, capital, and financial services that are often unavailable from mainstream financial institutions.
Once such coalition is CDFI or Coalition of Community Development Financial Institutions. The CDFI Fund is administered by the Department of the Treasury and has three components that consist of financial, technical, and Native American assistance and the fund supports development of other CDFI’s. Through these components, the fund provides loans, equity investments, and grants to support capitalization and capacity building. The requirements for the CDFI’s to receive funding include the ability to provide matching private and non-federal funds. Other information on this site includes the history and mission of CDFI Coalition, Members, an explanation of what CDFI’s are, Fund statute, types and programs, policy and advocacy information and tools, Coalition Institute information and reports.
Another alternative funding source is CFED or Corporation for Enterprise Development. They work on the local, state, and federal levels and their main purpose is to alleviate poverty by creating economic opportunity. CFED does not give loans, grants, or equity investments directly to entrepreneurs; rather they fund a small number of organizations that help with critical training and development of small businesses. This is through an initiative called the Microbusiness Solutions Learning Cluster, and it’s, “…designed to help organizations design more powerful, user-focused products and services to enhance microbusiness owners’ financial capability.” The participating organizations each get $25,000 to do this. Businesses cannot apply directly to CFED for funding. CFED acts more as a resource to help entrepreneurs find financing and training and development opportunities. Other information includes Programs, Policy, Knowledge Center, CFED in the news, and a blog.
For the most part, the obvious advantage of going through these sites to seek funding is that you will learn where to find money outside of the traditional lending and investing institutions and the likelihood of getting funding is probably much greater depending on your situation. There is much more money available than you could possibly take advantage of. That’s the good news. The downside to going this route is that these sites are difficult to navigate and often aren’t the organizations lending, granting or investing – they serve more as a resource to point you in the direction of the alternative institutions and programs. The coalition structure can be very convoluted and therefore confusing and frustrating to navigate because it takes a fair amount of time to just understand what they are and what they actually do. That’s all before you even get to the financial programs or resources. Personally, I feel like I need a consultant to distill all the options so I can get right to the source.
