Rise’s Community Development Financial Institution (CDFI) is launching at a time when the demand for flexible, responsive capital in the St. Louis community development sector continues to grow. Rise CDFI supports Rise’s existing work in neighborhoods where appraisal gaps constrain traditional lenders, and a lack of coordinated community-driven plans and investment strategies have led to inefficient and insufficient development while perpetuating the racial wealth gap.

Rise’s Experience With Lending

This is not Rise’s first experience with lending- since 1993, Rise has operated its Predevelopment Loan Fund. Most nonprofit community-based organizations do not have the ability to pay the upfront costs necessary to get a development project to the point where construction loan funding becomes available. To address this need, Rise offers predevelopment loans to nonprofit neighborhood organizations, enabling them to start planning and building toward a vision of improved neighborhood vitality.

What is a CDFI?

CDFIs, designated by the U.S. Department of the Treasury, provide financial services to underserved areas where commercial banks and lenders leave gaps. Some specialize in midsize to large loans to community-serving agencies; others provide small, individual loans and other credit and financial services.

Market Study

Rise engaged FUND Consulting to complete a market study to assist in assessing the needs and demands for financial products and services in our target market (City of St. Louis, St. Louis County, St. Clair County, and Madison County). The key findings and conclusions of this market study serve as a framework for our future planning and provide data for CDFI funding applications.

Rise has developed its CDFI business plan to respond to the market study noting a significant lack of capital for small real estate developers, especially those working north of Delmar, the city’s racial dividing line. Rise will pair loans for these developments with small business lending tailored to minority-owned contracting firms to address the need to build wealth and income across our region.

Operation of Rise CDFI

Colleen Hafner, formerly a Project Manager at Rise, has stepped into a new role as Rise’s CDFI Director. She has over 14 years of experience in the housing and community development field. Colleen is passionate about increasing access to capital as a way to build a more equitable St. Louis community for all.

Rise CDFI is initially offering two funds providing three loan products as well as an array of developmental services to our borrowers. These two funds are the Minority Contractor Loan Fund and the Small Developer Loan Fund.

Minority Contractor Loan Fund

The Rise CDFI Minority Contractor Loan offers term loans and lines of credit tied to specific construction contracts. Currently, we originate these loans at 6% interest with origination fees of 100 basis points. In general, no other fees (application fees, etc.) are charged. We will make loans as small as $20,000, and tailor the amount and term length to the specific contract requirements, timelines, and cash flow needs of the borrower.

Rise CDFI pairs all loans with development services to enhance the borrower’s short-term and long-term business goals and financial success. Rise has a significant history of providing capacity-building technical assistance to small nonprofit businesses. These services include staff and board development, financial management, strategic planning, and much more. Building off this framework, we provide and coordinate services to minority- and women-owned contractor borrowers, meeting each firm where they are and aligning capital with the tools to grow.

Small Developer Loan Fund

Our Small Developer Loan Fund builds upon our long-time experience lending capital for predevelopment expenses by adding construction lending for neighborhood-based residential and mixed-use development. We see this product as meeting a need for affordable loans that support the rehab of “naturally occurring affordable housing.” That is unsubsidized residential development in neighborhoods where acquisition/rehab (particularly for the re-use of vacant property) can be done at a range of affordability on a purely market basis. We can also lend on developments using subsidies such as CDBG, HOME, and Affordable Housing Trust Funds.

Rise’s unique development expertise means thoughtful and realistic loan underwriting and providing borrowers with the capacity-building tools they desire to grow their business and increase their impact in a given community. The ultimate goal is to build wealth for, by, and within a neighborhood – leaving each block in a stronger place than before.

What’s Next for Rise CDFI?

As we continue rolling out these new loan programs, we will focus on increasing our capital base so that we can make more loans, provide more services, and bring more alignment of community development tools to our communities. Rise is awaiting word on two grant applications and is focusing on collaborations with groups such as the St. Louis CDFI Coalition as well as anchor institutions to increase capital for all CDFIs in the region. Key elements to the Rise CDFI are the development services and business assistance offered to all borrowers. One of our top priorities is to ensure we are aligning with as many existing programs as possible (versus duplicating), and helping ensure our borrowers have access to the right programs and support so that they can grow, build capacity, and ultimately build wealth.

Colleen Hafner, Rise CDFI Director

“The Ferguson Commission Report called CDFIs to action to build wealth in communities by offering increased access to financial tools. These tools can build affordable housing. They can support small businesses. They can help each borrower build wealth. And all of that we can, and must, do through a racial equity lens to truly move St. Louis forward.” Colleen Hafner