Promoting Equitable Growth through Asset-Backed Securitization for Community Development Financial Institutions

Community Development Financial Institutions (CDFIs) have long served Black, Brown, and other underserved borrowers, with 60% of CDFI loans made to people of color between 2002 and 2020 for instance, but CDFIs lack sufficient flows of sustainable capital. There is significant opportunity to support equitable and inclusive growth by developing a scalable and sustainable market-based approach to increase capital flows to Black, Brown and underserved communities via Community Development Financial Institutions (CDFIs) through asset-backed securitization.

An understanding of the barriers and solutions, and potential role for federal policy, for asset securitization focusing on small and medium CDFIs that don’t currently have access to the capital markets. The report assesses the initial feasibility of an asset securitization framework that would not require CDFIs to standardize loan for their borrowers; customization and flexibility support the impact missions of financial inclusion in underserved communities.

The Partner

The US Impact Investing Alliance

The Challenge

The Outcome

The Impact

Literature Review Landscape Analysis Qualitative Interviews Innovative Financial Structure Federal Policy