CDFIs: On the Front Lines of Disaster Recovery Efforts

Community Development Financial Institutions (CDFIs) are uniquely positioned to meet the lending needs of recovering communities. Disasters hit vulnerable communities the hardest, and many CDFIs have decades of experience providing economically disadvantaged individuals with the tools they need to become self-sufficient stakeholders in their own future.

CDFIs have access to tools that are able to effectively rebuild dis-invested communities and make loans to individuals with limited or poor credit histories -requiring more than simply providing access to conventional loans. The flexibility to adapt lending guidelines to the needs of borrowers is possible: allowing for acceptance of unconventional collateral for loans; to help small businesses navigate government red tape; and to provide education, training, and assistance to potential borrowers.

In the wake of a natural disaster, Americans mobilize billions of dollars in relief through foundations, individuals, and the public sector. While those resources go toward the rebuilding of infrastructure, individual assistance, and the meeting of immediate needs, they also support more complicated medium and long-term efforts to rebuild and repair housing, replace damaged building stock, and jump-start economic activity.

FEMA can handle much of the short-term emergency assistance, but long after federal government is gone, mission-driven lenders – particularly those with long-standing ties to affected communities – will be on the ground working to restore housing stock, rebuild community facilities, and provide technical assistance and financial assistance to businesses and families.

As Congress debates additional federal assistance for communities devastated by natural disasters, they should consider the track record of CDFIs that have the infrastructure and relationships in place to offer immediate and prolonged help throughout recovery efforts.

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