Fahe has received a $500,000 low interest loan from Deutsche Bank for use in Appalachian areas not benefiting from the Community Redevelopment Act (CRA). Because many small community banks in the region have not been profitable in recent years, they are not incentivized by tax liabilities to participate in CRA-supported projects. Deutsche Bank’s low interest loan will help overcome housing development barriers created by this uneven distribution of participating financial institutions in Appalachia. Fahe’s loan was made available by the formation of the Community Development Financial Institutions (CDFI) New Partners Program. The CDFI New Partners Program was designed by Deutsche Bank Americas Foundation (DBAF) and the Bank’s Community Development Finance Group (CDFG) to deploy philanthropic resources for community development through high-performing nonprofit CDFIs.
The Community Redevelopment Act was enacted by the Congress in 1977 to encourage banking and saving institutions to help meet the credit needs (such as mortgage and business loans) of the communities in which they operate, including low- and moderate –income neighborhoods. The CRA was also enacted to reduce and prevent the act of redlining, which is the practice of denying or charging more for services such as banking to people living in specific communities, oftentimes low-income neighborhoods.
Many banks participate in the CRA, however banks that do below a certain amount of business are exempt. In rural Appalachia there are large areas that do not receive the benefit of the CRA due either to the size or the lack of banks.
Fahe was chosen to receive the $500,000 based on criteria set by the CDFI New Partners Program. These criteria reflect a strong ambition to better serve target markets with a focus on areas of persistent poverty and with limited availability of CRA-motivated resources in their market geography. The criteria also dictates that the capital be awarded to institutions that demonstrate strong financial and portfolio performance and an ability to deploy award capital for maximum impact.
Over our history in working closely with Appalachian communities, we have demonstrated our ability to get money and other resources where they are needed in traditionally difficult markets. The $500,000 will be applied to our Community Loan Fund (CLF) that offers Fahe members and non-profits several types of loans to initiate and complete real estate development projects such as housing and community facilities. The increase to the CLF will allow us to serve at a higher capacity.
To learn more about the CDFI New Partners Program you can visit their site at https://www.db.com/usa/content/en/deutsche-bank-launches-program-to-support-community-development-in-underserved-us-regions.html. To learn more about Fahe’s Community Loan Fund, visit www.fahe.org/community-lending.