CDFIs, like Colorado Enterprise Fund, provide underserved communities with capital when banks say no. The niche is attracting investors seeking impact, including Google and Netflix
by Tamara Chuang
The following is an excerpt. Read the full story at coloradosun.com.
CDFIs just really know how to manage their risk, said Helen Leung, chief operating officer at Aeris Insight, which rates CDFIs on the same CAMEL standards banks use: capital, assets, management, earnings and liquidity.
“CDFIs monitor their loan portfolios very closely,” Leung said. “CDFIs would call a small business owner if their payment falls behind by 15 days. They say, ‘What happened? How can we help?’ And you say, ‘I lost my guy who delivers my pizzas.’”
CDFIs are much smaller than commercial banks and must have a community-minded mission. They’re available when their customers hit trouble spots. They know how to make arrangements if the customer can’t pay on time.
“It’s not that they are lenient. It’s not that they give up money without going through a very good critical underwriting criteria. We look at their procedures and we look at their portfolios and the way they manage their loans is very hands-on,” she said. “This is why they’re successful.”
Read the full story at coloradosun.com.