3
Primary Mission Section
Documenting mission and strategy
An Applicant must be able to demonstrate that it has a primary mission of promoting community
development.
2
The Draft Application would have required applicants to submit an acceptable
strategic plan to satisfy this requirement. Many stakeholders, particularly those advocating for
smaller or less-resourced CDFIs, indicated that producing a strategic plan could be burdensome
and costly. To reduce potential burdens and costs, the Revised Application and supporting
guidance make it clear that if an Applicant does not have a strategic plan, it may instead submit a
board- or owner-approved narrative. The narrative must describe the community development
outcomes that the Applicant believes will result from its financing activities and describe how
those activities will lead to the outcomes.
Responsible financing standards
To meet the CDFI certification requirements for responsible financing standards, an Applicant
must provide Financial Products and Financial Services that are consistent with promoting
community development.
3
The Revised Application collects information on an Applicant’s
financing practices to ensure those practices are consistent with a community development
mission. Many commenters expressed support for greater clarity about responsible financing,
and many expressed concerns about specific standards, described below.
Some commenters sought greater clarity on how the CDFI Fund will interpret information that
an Applicant provides in this section. In response to those comments, this section now begins
with an informational narrative. The narrative identifies the practices that the CDFI Fund
considers to be consistent with promoting community development. The narrative specifies that
a CDFI’s Financial Products should (a) not harm consumers; (b) be affordable and originated
based on an assessment of whether a borrower is able to pay back a loan; and (c) have terms and
conditions that are transparent and understandable to the borrower. These principles also specify
that the safety, affordability, and transparency of an Applicant’s Financial Services are an
important aspect of the Applicant’s commitment to a community development mission. The
narrative also clarifies that a CDFI should practice fair collections and comply with federal, state,
and local laws.
2
See 12 U.S.C. 4702(5)(A)(i).
3
See 12 CFR 1805.201(b). In considering the responsible financing standards, the CDFI Fund considered public
comments, consultation with financial regulators and other agencies, and the following sources: Department of
Defense, proposed and final rules on Limitations on Terms of Consumer Credit Extended to Service Members and
Dependents (79 Fed. Reg. 58602 (Sept. 29, 2014), 80 Fed. Reg. 43560 (July 22, 2015); Consumer Financial
Protection Bureau (CFPB), rules on Qualified Mortgages (12 CFR § 1026.43) and high cost mortgages (12 CFR §
1026.32); CFPB, proposed rule on Payday, Vehicle Title, and Certain High-Cost Installment Loans, 81 Fed. Reg.
47864 (July 22, 2016); CFPB,
Trends in overdraft/non-sufficient fund (NSF) fee revenue and practices; FDIC,
guidance on “Overdraft Payment Programs and Consumer Protection,” FIL-81-2010 (Nov. 24, 2010); FDIC,
“Supervisory Guidance on Multiple Re-Presentment NSF Fees” (Aug. 2022); Responsible Business Lending
Coalition, Small Business Borrowers’ Bill of Rights; and Cities for Financial Empowerment Fund, Bank On
National Account Standards.