Small businesses play an integral role in our economy. During the pandemic, we saw many of these businesses struggling to weather the economic fallout and keep their doors open. Now three years since the beginning of COVID-19, many businesses have started, innovated, relocated, or closed. 

While attempts to provide government support were made, like the Paycheck Protections Program and ARPA (American Rescue Plan Act) funding, it was clear funds were not reaching the diverse and BIPOC businesses in dire need of help. With Wells Fargo support, Prosperity Now found five high-impact Community Development Financial Institutions (CDFIs) that serve Black entrepreneurs to understand their current resource gaps, visions for the future, and everything in between to co-create a Playbook outlining capacity-building opportunities for CDFIs and their communities.

CDFIs and community banks were made to fill gaps in financial services for people outside the mainstream market. This need still exists now as it did then, but instead of supporting only rural populations, these organizations predominantly serve low-to-moderate income communities. For that reason, CDFIs distributed critical pandemic capital to economically distressed communities, especially communities of color. As preexisting and modern-day systems cater to support the mainstream market, there are missing opportunities that drive investment in BIPOC (Black Indigenous People of Color) communities for the long term. Although surges in temporary support are an improvement, it is fleeting and unsustainable.

CDFIs and entrepreneurship-serving organizations support overlooked entrepreneurs and are best positioned to deliver—or partner with others in the ecosystem to provide—education, training, technical assistance, and access to capital to help bridge the economic opportunity gap. Through a collection of interviews and discussions about constraints that limited the impact that CDFIs experienced during the racial awakening of 2020—amid massive philanthropic support—we can identify a vision for the future.  Through honest conversations and reflections, we’ve arrived at this Playbook that summarizes the collective ideas, experiences, and hopes expressed by five CDFIs with extensive knowledge in their field.

We’ve identified a shared goal of scaling the level of support provided to Black entrepreneurs from BIPOC-led CDFIs-who need investments to grow their portfolios, build up infrastructure, distribute targeted lending, and provide technical assistance at the same level as their wealthier White-led CDFI peers. For real impact, there needs to be intentional coordination to support and fix the institutions and capacity-building funnels for minority business support organizations. Moreover, implementing these efforts must happen in collaboration with, and be vetted by the direct service organizations. The Playbook highlights those common themes, strategies, and opportunities where small CDFIs can integrate ways to grow their institutions through community-based implementations, advocating as subject matter experts and creative ideations.

With the support of partners in this space, like the African American Association of CDFIs and the Expanding Black Business Credit Initiative, we invite others to attend the upcoming Learn and Grow webinar series May 3-17, where we dive deeper into the key takeaways and recommendations in the Playbook. Each webinar will focus on one of the three topics important to building the infrastructure of CDFIs and their capacity: Financial Management, Data Management, and Technical Assistance and Resources. In addition to the webinars, selected attending CDFIs will be eligible to receive coaching time with one of the high-impact CDFIs from this initiative.