A Look at Rural CDFIs

Over the past decade, we’ve seen a true revolution in the development and deployment of resources to help America’s rural entrepreneurs.  While it’s never easy (in rural, suburban, and urban places) to grow a venture that can thrive over the long term, it’s also true that it has never been easier to find and access needed tools and resources to start a business in rural America.

Community Development Financial Institutions (CDFIs) have been at the forefront of this transformation, and their impacts are ably highlighted in new research from the Richmond Federal Reserve. The article examines the Federal Reserve’s national CDFI survey with a focus on how rural CDFIs have been faring. The study finds that rural CDFIs are an essential source of small business finance in rural places, and that demand for these services is very strong.  In 2024, 78% of rural CDFIs reported growing demand for their financial services.

However, the survey finds that these rural CDFIs are highly dependent on federal backing, with 70% identifying federal dollars as their primary funding source. Unfortunately, with the recent White House decision to furlough all CDFI fund employees, these emerging funds have been placed at great risk.

Efforts are underway to reverse these layoffs, and to build a more sustainable foundation for the program. These efforts are bipartisan and have the backing of CDFI advocates and the banking and credit union sectors as well. We’ll see what happens next, but uncertainty is never a good thing for entrepreneurs.  This is especially true in many rural places where other types of small business funding are difficult to access.