CDFI FAQs

A certification program offered by the U.S. Treasury Department that identifies financial institutions dedicated to providing financial services and promoting financial security in low-income and historically underserved communities.

The CDFI program was created by Congress in 1994. The goal was to combine federal money with private capital to help qualified financial institutions meet the needs of underserved communities that typically lack access to affordable loans and safe financial services.

• CDFIs are eligible to apply for grants from the CDFI fund to expand services to financially underserved communities (capital grants up to $1 million; Technical Assistance grants* up to $125,000 as of 2020)
• Any credit union may apply for a CDFI Technical Assistance grant before certification, but they must have the ability to become CDFI-certified within three years of receiving the grant.
• CDFIs have access to additional training resources
• Membership in a learning community of like-minded credit unions
• CDFIs are exempt from the National Credit Union Administration’s (NCUA) member business lending cap
• CDFIs have limited exemptions under Consumer Financial Protection Bureau (CFPB) Qualified Mortgage and Ability-to-Pay rules

While some credit unions may feel that a focus on underserved communities is just too risky, call report data consistently shows that the median CDFI credit union in every peer group outperforms the median non-CDFI in terms of earnings (return on average assets (ROAA), lending (Loans-to-shares), asset growth and membership growth. Inclusiv has published these findings in two research reports (Inclusive Finance 2018, 2020) and comparable findings have been independently reported by NCUA and CUNA in public presentations.

There are 7 tests for CDFI certification, most of which are automatic or nearly automatic for credit unions

Automatic for All Credit Unions (3 tests) 

1. Legal Entity 
2. Financing Entity
3. Non-Governmental Entity 

Automatic for All Low-Income Designated (LID) Credit Unions (1 test)

4. Primary Mission (may be fulfilled in other ways by non-LID credit unions)

Easily Fulfilled by Most Credit Unions (2 tests)

5. Development Services (e.g., direct or indirect provision of member financial education, coaching, counseling, etc.)
6. Accountability (governing board and/or advisory board ties to specific communities)

Critical Test for Credit Unions (1 test)

7. Target Market, which requires that at least 60% of new loans (#, $) are issued in one or more of the following, designated “CDFI Target Markets”:
   1. CDFI Investment Areas: economically distressed geographies designated by the CDFI Fund
   2. Low-Income Targeted Populations: similar to NCUA’s determination of low-income members
   3. Other Targeted Populations: communities that have historically been underserved by mainstream financial institutions, including members who are African American, Hispanic and Native American

The standard application is open year-round while the streamline application is open twice a year.

No, the CDFI Fund does not charge a fee to apply for certification.  If you would like help in completing your certification application, Inclusiv offers affordable CDFI application assistance for credit unions of all sizes.

Initial certification is good for two years, after which the CDFI Fund requires annual recertification. Inclusiv provides members with a free annual recertification service.

In order to maintain certification each CDFI must submit an Annual Certification Report (ACR) attesting to its continued eligibility for certification. Inclusiv offers free ACR assistance to its members. Learn more by contacting Jules Epstein-Hebert at jhebert@inclusiv.org.

Inclusiv offers free, live weekly informational sessions to assist credit unions interested in the CDFI program. Register here:  CDFI Education Sign-up

Inclusiv is the only CDFI-certified intermediary and national advocate for community development credit unions.  Inclusiv provides capital, makes connections, builds capacity, develops innovative products and services and advocates on behalf of credit unions that serve more than 10 million residents of low-income urban, rural and reservation-based communities across the US with more than $112 billion in combined assets. Founded in 1974, Inclusiv is headquartered in New York, NY, with offices in Madison, WI and Atlanta, GA.