When it comes to accessing financial services, individuals and businesses often have two primary options: Community Development Financial Institutions (CDFIs) and mainstream lenders, such as High Street banks.


While both serve the purpose of providing funds to those in need, they differ significantly in their missions, target clientele, and approach to lending. As a CDFI lender itself, Let’s Do Business Finance aims to shed light on the key differences between themselves and mainstream lenders, highlighting its unique roles in promoting financial inclusion and community development.


Supporting where others can’t

The fundamental difference between CDFIs and mainstream lenders lies in their mission and purpose. CDFIs are financial institutions which are specifically dedicated to serving underserved communities. Their primary objective is to provide affordable and responsible financial debt to individuals, businesses and organisations which have limited access to traditional lenders. They also work towards promoting economic and social development, job creation, and community revitlisation.


A wider target market

CDFIs typically serve communities that are underserved or economically disadvantaged. These communities may have limited access to traditional financial services due to various factors, such as low income, lack of credit history, or simply where they live
or are based. CDFIs actively seek out opportunities to serve these populations, offering personalised and flexible lending options to meet their specific needs. Mainstream lenders do serve these communities, but their lending criteria are generally stricter which often results in rejection, or lower offers. In essence, they are looking to turn a ‘no’ into a ‘yes’.


Looking at more than just the figures

One of the significant advantages of CDFIs is their personalised relationship approach to underwriting. Instead of relying solely on credit scores and financial ratios, they really get under the skin of the business to understand how it works, considering other factors, that cannot be judged merely by algorithm such as character, track record, its development plans, community impact, and the borrower’s potential to repay.

This approach may take a little longer than a ‘computer says yes’ approach, but by investing the time in getting to know and understand the applicant, it allows them to provide loans to borrowers who may not qualify for financing from mainstream lenders. Moreover, CDFIs tend to offer more flexible loan terms compared to mainstream lenders. These factors make them a more attractive option for those seeking affordable and sustainable financing solutions and a more relationship-based approach that most banks and fintech lenders are unable to provide these days.


Caring for the Community

CDFIs are deeply rooted in their commitment to community development and social impact. Beyond providing financial products, they actively engage with the communities they serve to identify and address their unique needs. They may offer financial literacy programmes, technical assistance and mentoring to help borrowers make informed financial decisions and improve their financial well-being.

Both mainstream lenders and CDFIs are vital for a well-functioning financial system. By understanding their differences, individuals and businesses can make informed decisions about which type of lender best aligns with their needs and goals. Ultimately, their existence alongside mainstream lenders contributes to a more inclusive and equitable financial landscape.

Let’s Do Business Finance has been a CDFI for nearly 20 years, supporting businesses large and small across the South East and East of England to access the finance needed to achieve their dreams of growth. Our mission is to empower businesses – and business leaders – to embark on journeys of initiation, growth, and success, advocating for accessibility to business loans for all.

Unlike typical lenders reliant on automated algorithms, we are firm believers in grasping the entirety of the picture, really getting to know you and your business and making decisions grounded in a having a true understanding of your business vision, recognising possibilities that computer algorithms may inadvertently neglect.

To discuss how business finance can help you, and what business loans are right for your business and your growth ambitions, get in touch! We would be happy to help



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