FCF Loan Fund Helps Entrepreneurs Who Need It Most
The First Children’s Finance Loan Fund began in XXXX to help child care entrepreneurs who were having trouble accessing traditional funding. XX years later, the Loan Fund has loaned more than $20 million to child care entrepreneurs.
FCF’s Loan Fund – the nation’s only Community Development Financial Institution (CDFI) that loans solely to support child care – understands the passion and dedication it takes to provide quality child care. The Loan Fund works with entrepreneurs to get started, expand, or sometimes just make ends meet during a transition. Valued investors and funders provide FCF with the funding necessary to help make those entrepreneurs’ dreams into reality.
Along with providing financing to child care entrepreneurs, the Loan Fund also provides consultation and training for business owners to help ensure that they are on the right track to success!
First Children’s Finance Is a CDFI
Understanding the importance of the work done by the FCF Loan Fund begins with a little history on the crucial role filled by CDFIs.
CDFIs are alternative lenders to traditional banking. The purpose is to serve those who cannot seek standard bank financing for many reasons (lack of income or wealth, lack of access to resources, unfair lending practices, and more).
Why Do CDFIs Need to Exist?
Prior to the 1970s, many banks wouldn’t provide loans or other financial services to low-income neighborhoods. These low-income areas were considered too high risk due to low household income, residents of color, and older housing stock that may not have been properly maintained.
In 1977, Congress passed the Community Reinvestment Act (CRA), which required federal banking regulators to encourage financial institutions to help meet the credit needs of the communities they serve, including low- to moderate-income neighborhoods. While the intent was good, inequality among lending institutions continued, as these laws did not foster strong enforcement practices.
In 1992, community development organizations and professional groups formed the CDFI Coalition. Prior to being elected, President Bill Clinton promised to create a program that would support the creation of community development banks and loan funds to increase investment in underserved neighborhoods. Clinton established the CDFI Fund in 1994, creating a national network of community development banks, credit unions, and loan funds. Today, the CDFI industry includes over 1,300 certified organizations.
Why Does First Children’s Finance Do This Work?
While many CDFIs focus on place-based work, specific neighborhoods or cities, others like FCF concentrate on certain industries. FCF has a niche focus by providing funding to child care business owners.
We presently offer lending in nine states (MN, MI, IA, VT, OR, WI, MO, ND, SD). We offer loans to child care centers as well as home-based family providers.
Without childcare business, many parents cannot work, impacting the economics of families and communities. The childcare industry is not always a high-profit industry, causing traditional banks to not fully understand the needs of borrowers that might be operating with slim profit margins and not separating their home-life and business operations.
Banks can support our work through grants and loans to our organization that will qualify them for CRA credit. Our loan portfolio and operating dollars come from banks, foundations, and corporations. We are always looking for partnerships to grow this work.
First Children’s Finance Loan Fund provides loans with interest rates comparable with banks and far lower than credit cards and same-day lenders. We often offer longer terms than bank loans or lines of credit can allow. We take a holistic approach to underwriting our borrowers based on traditional measures like their historical income, cash-flow projections, as well as their past business experience, transferable skills, planned impact, and commitment to the communities they serve.
Examples of the entrepreneurs assisted by the Loan Fund include:
- Jesenia Amoros Hernandez’ Little Scholars II Daycare Center in Wyoming, MI
- Said Nur’s Alphabet Child Care Center in Minneapolis, MN
- Yolanda Massey’s Hooked on Books Childcare in Detroit, MI
If you’re an entrepreneur that needs assistance or an investor/funder looking to make a difference, reach out to the FCF Loan Fund today!
Are you an entrepreneur or a potential investor/funder who would like to know more about the incredible possibilities that happen every day with the FCF Loan Fund? Reach out to us at XXXXXX.
