A new certification allows Grand Rapids Opportunities for Women to increase its lending level into the hundreds of thousands of dollars.
GROW announced that the U.S. Department of the Treasury has designated GROW’s microloan program a Community Development Financial Institute, which will allow GROW to provide additional financial services to economically disadvantaged individuals in West Michigan
CDFIs are certified by the Treasury to inject new sources of federal capital into neighborhoods that “lack access to financing,” according to the CDFI website.
“CDFIs can be banks, credit unions, loan funds, microloan funds or venture capital providers. CDFIs are helping families finance their first homes, supporting community residents starting businesses and investing in local health centers, schools or community centers. CDFIs strive to foster economic opportunity and revitalize neighborhoods,” reads the website, which says there are 1,000 CDFIs operating nationwide.
To become certified, a financial institution must have a primary mission to promote community development, provide financial products and service, serve one or more defined low-income target markets, maintain accountability to the community it serves and be a legal non-governmental entity. GROW fits these categories, said CEO Bonnie Nawara.
“In addition to our microloan program,” she said, “we provide these entrepreneurs with training and business counseling services to help them learn about all aspects of owning and operating a business, helping them take it from an idea to start-up, and then to sustain their business over time.”
With the CDFI designation, GROW can now access federal and private-sector funding that was previously unavailable. Becoming a CDFI allows GROW to lend up to $250,000 per applicant, Nawara said.
“It adds to GROW’s capacity, but the main benefit is access to capital for our community’s entrepreneurs. GROW joins a network of over 1,200 nonprofit financial institutions dedicated to providing access to capital to create opportunities for underserved individuals and areas,” she said.
“GROW is eligible to receive lending capital and grants from the CDFI Fund. More importantly, GROW can leverage that capital against investments from banks, foundations and corporate philanthropy.”
In the next three years, GROW wants to raise $1.25 million and increase staff to grow its volume to 30 loans that would create or expand 30 businesses and create 25 jobs, Nawara said.
More than half of GROW’s clients are low- to moderate-income individuals who want to either start or grow their businesses in West Michigan.
About 51 percent of the businesses GROW’s microloan program services are minority-owned. In the past four and a half years, GROW has given out more than $1 million in microloan funds to West Michigan businesses. Last year, GROW helped create more than 53 new businesses and fund 21 new startups, creating about 92 jobs in West Michigan’s low- to moderate-income communities, Nawara said.
“GROW has identified African-American and Hispanic entrepreneurs as key to the success of the CDFI,” she said. “Today, 23 percent of clients are African-American and six percent are Hispanic. GROW has developed partnerships with economic and community development organizations to help us reach out to these entrepreneurs.”