Alternative Funding Sources

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The Corporation for Enterprise Development (CFED) is a national nonprofit 501(c)3 organization that empowers low and moderate-income households to build and preserve assets by advancing policies and programs that help them achieve the “American Dream.” This includes buying a home, pursuing higher education, starting a business, and saving for the future. CFED is one of the leading sources for data about household financial security and policy solutions. This company promotes programs on the ground and invests in social enterprises that create pathways to financial security and opportunity for millions of people (CFED, 2013). Some of the advantages of using alternative financing include:

•       Easier approval, as opposed to bank loans that can be advantageous in certain situations, but are not available to everyone
•       Flexible repayment terms, instead of making fixed monthly payments, the business owner may have the option of variable payments
•       Promote new business concepts, many businesses with novel ideas are available to come to the forefront of the industry and become successful

National Community Investment Fund (NCIF) is a company that invests in CDBIs that display both strong financial and social performance. To determine if an institution meets these criteria, NCIF evaluates the institution using a Development Impact analysis as well as an internal CAMELS analysis. The institution must also provide a planned exit strategy. NCIF performs a thorough analysis that examines both historical performance and future projections for these institutional characteristics. The CAMELS rating is a supervisory rating system originally developed in the United States to classify a bank’s overall condition. These are the components of a bank’s condition that are assessed:

•       (C)apital adequacy
•       (A)sset quality
•       (M)anagement capability
•       (E)arnings
•       (L)iquidity
•       (S)ensitivity

NCIF selectively provides analysis of portfolio institutions for investor clients. Using publicly available financial information and the NCIF Social Performance Metrics, NCIF constructs an analysis document that provides an examination of each portfolio institution as well as overalls summary data and comparisons to relevant peer groups (NCIF, 2013).