A community development finance institution (CDFI) is a not-for-profit lender that helps businesses access funding. They often have a mission to invest in deprived regions, women-led businesses, or ethnic minority-led businesses. Unlike traditional lenders, CDFIs assess the social impact of a business when deciding to approve loans.

While each individual CDFI has its own lending criteria, these will be broad so that funds stay as accessible as possible. For example, BEF North East can lend to most businesses. The only excluded sectors are mining, gambling, metal or scrap collection, and primary agriculture.

Loans from CDFIs are designed to compete with those from traditional lenders like high street banks. Banks could charge lower interest rates, particularly for the safest and most creditworthy applicants. CDFIs often specialise in helping businesses which have been turned down by traditional lenders.

A business loan can be used to cover virtually any business-related expenditure. For example, most BEF North East loans are used to provide working capital, invest in business growth, or to refinance pre-existing debts. Vehicles, staff, training, equipment, premises, and marketing are all valid uses of a Small Business Loan.

Each CDFI will have its own specific mission, which sometimes involves covering a particular area. For example, BEF North East is the only CDFI dedicated to only lending to businesses in that region of England.