What does CDFI stand for in the U.S. small-business finance sector?

CDFI stands for Community Development Financial Institution in the U.S. small-business finance sector.

CDFIs are specialized financial institutions that provide credit and other financial services to underserved communities. They can include community development banks, credit unions, loan funds, and venture-capital funds. Their work often focuses on borrowers and neighborhoods that conventional lenders have historically served less fully.

The federal Community Development Financial Institutions Fund, created in 1994, supports certified CDFIs through programs that include grants, investments, and technical assistance. CDFIs may finance small businesses, affordable housing, nonprofit facilities, and community projects.

CDFI is sometimes confused with CRA, the Community Reinvestment Act. The CRA is a federal law encouraging banks to serve the communities where they operate; a CDFI is an institution or category of mission-focused financial institution. The distinction matters when discussing local lending and economic development.