Microlending by CDFIs: Small Loans, Big Impact

For many entrepreneurs, the biggest barrier to starting or growing a business is not a lack of talent or determination — it’s access to affordable capital. Traditional lenders often cannot profitably underwrite very small loans, leaving promising business owners without the financing they need to purchase equipment, secure inventory, hire staff, or bridge early cash-flow gaps. That is where certified CDFIs step in. Supported in part by the CDFI Fund, CDFIs specialize in making small-dollar loans — often under $50,000 — paired with hands-on technical assistance, credit building, and business coaching. These microloans help entrepreneurs launch home-based businesses, open storefronts, stabilize family farms, and expand smaller, craft manufacturing operations.

The following case studies highlight how CDFI microlending helps entrepreneurs overcome barriers that traditional lenders will not address. From a Michigan compost farm navigating township approvals and grant reimbursements, to a rural Ohio flower grower expanding with greenhouse financing and business training, to a Connecticut event planner building savings and creating jobs, these stories demonstrate how small, flexible investments generate durable economic opportunity.

Annual Impact

• CDFIs provide over $1.3 billion in microloans each year.
• The CDFI Fund’s Small Dollar Loan Program program provides $9 million in annual grants for Loan Loss Reserves and Technical Assistance to enable Certified CDFIs to establish and maintain small dollar loan programs.
• Further information and research on microlending can be found at aeoworks.org.