CDFIs’ MacFarlane has high hopes for Excelsior Banking Network

Jan 28, 2020, 2:19pm EST

Why Albany’s Community Loan Fund sees opportunity in Cuomo’s new banking proposal

Gov. Andrew Cuomo wants to bring $25 million to organizations that offer low-cost loans to low-income communities as well as minority and women-owned businesses.

The program could be a boost for organizations like Linda MacFarlane’s.

MacFarlane is the executive director of the Community Loan Fund of the Capital Region, a nonprofit community development financial institution that offers low-cost loans across an 11-county area. It lends more than $2.5 million each year to community organizations and small businesses that may not have access to traditional banking. It also offers training and technical assistance programs, as well as an in-house incubator.

“Financing for [community development financial institutions] is becoming more restrictive and competitive. There is still funding available that we can apply for, but that is quite often, when Trump is looking for cuts, that’s an area that could be cut,” MacFarlane said. “It becomes very competitive. We applied last year and were not awarded. It means we need to raise money from other sources for training and technical assistance.”

Cuomo’s proposal — included as part of this year’s budget — would create the Excelsior Banking Network, which would provide $25 million in new seed funding over five years for the state’s community development financial institutions (CDFIs) fund. The money would be used to expand access to affordable bank accounts and credit products. The Federal Deposit Insurance Corporation estimates that about 25% of New Yorkers do not have bank accounts, often turning to payday lenders instead.

MacFarlane is also chair of the statewide New York State CDFI Coalition. She said the Excelsior Banking Network would be composed of CDFIs across New York State — there are 83 CDFIs, a collection that covers every county. Often the CDFIs are the only providers of banking and other financial services in low-income communities. She said the New York State CDFI Coalition has been discussing the proposal with Cuomo’s office, the state Department of Financial Services and Empire State Development.

CDFIs can take different forms and are certified through the U.S. Treasury. For example, CDFIs can be a loan fund focused on minority- and women-owned businesses like the Community Loan Fund of the Capital Region. Or they can focus on financing for organizations that work with people with disabilities or affordable housing.

Recent investments from the Community Loan Fund include financing an expansion at Faisal West Indian Grocery and Halal Meat in Schenectady, which allowed the owner to increase the number of products. And it has helped Repose Wellness in Albany, a massage therapy business, finance new float pods and an infrared sauna. These are companies that would have trouble getting loans from a traditional bank. The Community Loan Fund of the Capital Region was funded 34 years ago by a group of nuns who saw an inequality in housing and made the first investment.

Today, the group is funded by faith-based organizations, socially concerned individuals, businesses, organizations and financial institutions — both banks and credit unions. Banks get a Community Reinvestment Act credit for investing with the Community Loan Fund.

The group has also developed an emerging investors program, which allows individuals to contribute who may not be able to afford the full investment. Instead, the Community Loan Fund has been putting these investors in groups of 10 making investments of $100 a month instead of $1,000, so after 10 months they have a full investment.

Programs like that will become more important as the Community Loan Fund starts construction on a $12 million expansion that includes a larger incubator space and affordable housing units in Albany’s Arbor Hill.

The Community Loan Fund is raising $4 million for that project, with $8 million coming from the developer Home Leasing for the affordable housing portion. It has also received an $800,000 grant through the state’s Regional Economic Development Council competition.

Chelsea Diana
Albany Business Review