Funding Support Program

• A business enterprise owned and controlled by individuals whose residences are in a Community Development Financial Institution (CDFI) investment area;
• A business enterprise that will build, open, or operate a location in a CDFI Investment Area; OR
• A business that certifies it is owned and controlled by individuals who have had their access to credit on reasonable terms diminished compared to others in comparable economic circumstances, due to their:
  • membership of a group that has been subjected to racial or ethnic prejudice or cultural bias within American society;
  • gender;
  • veteran status;
  • limited English proficiency;
  • disability;
  • long-term residence in an environment isolated from the mainstream of American society;
  • membership of a federally or state-recognized Indian Tribe;
  • long-term residence in a rural community;
  • residence in a U.S. territory;
  • residence in a community undergoing economic transitions (including communities impacted by the shift towards a net-zero economy or deindustrialization); or
  • membership of an underserved community (see Executive Order 13985).

SEDI (Socially and Economically Disadvantaged Individuals) businesses often face more significant challenges in accessing capital compared to their non-SEDI counterparts due to several factors:

1. Limited Financial History and Collateral: Many SEDI businesses lack a robust financial history or sufficient collateral, making it difficult for traditional lenders to assess their creditworthiness favorably. This issue is exacerbated by the economic environments in which these businesses often operate, which are typically less financially stable.
2. Systemic Discrimination and Bias: Systemic biases and discrimination in lending practices disproportionately affect minority-owned and women-owned businesses. These biases can result in higher loan denial rates and less favorable loan terms even when these businesses do manage to secure funding.
3. Networking and Connections: Non-SEDI businesses generally have better access to networks that facilitate introductions to investors and financial institutions. In contrast, SEDI businesses might lack these crucial connections, limiting their access to potential sources of capital.
4. Awareness and Information Gaps: SEDI business owners may not be as aware of the various funding opportunities available to them or may find it challenging to navigate the complex landscape of grants, loans, and investment options. This lack of information can hinder their ability to secure necessary funding.
5. Higher Risk Perception: Lenders and investors often perceive SEDI businesses as riskier investments due to their smaller size, newer market presence, or the economically disadvantaged communities they serve. This perception can lead to higher interest rates and more stringent lending terms.
6. Economic Disparities: SEDI businesses are often situated in economically disadvantaged areas with lower average incomes and less economic activity, making it harder to generate the revenue needed to attract investment.

These challenges create a compounding effect, making it difficult for SEDI businesses to grow and compete on a level playing field with non-SEDI businesses. Providing targeted support and creating inclusive financial policies are crucial steps toward addressing these disparities and fostering a more equitable economic environment.

Jurisdictional funding refers to financial support allocated based on the governing authority or jurisdiction that administers the funds. In the context of federal, state, and municipal grant and loan programs, it means that the source and administration of the funds are tied to specific levels of government:

1. Federal Funding: These funds are provided by the federal government and are typically distributed through national agencies and departments. Federal grants and loans often aim to address nationwide priorities and initiatives, such as infrastructure, education, healthcare, and disaster relief. Examples of federal loan programs include Small Business Administration (SBA) Loans, Community Development Block Grants (CDBG), and Economic Injury Disaster Loans (EIDL).
2. State Funding: State-level funding is provided by individual state governments. These funds are usually tailored to address the specific needs and priorities within that state. State grants and loans might support projects like regional economic development, state-level education initiatives, and local infrastructure improvements. Examples of state loan programs in Alaska include the Alaska Microloan Program, the Rural Development Initiative Fund, and the Small Business Economic Development (SBED) Loan Program.
3. Municipal Funding: This type of funding is provided by city or local government entities. Municipal grants and loans are often used to address hyper-local needs, such as community development projects, local business support, and public safety improvements. Examples of municipal loan programs in Alaska include the Anchorage Small Business Loan Program, the Fairbanks Economic Development Corporation Loan Program, and the Juneau Economic Development Council Revolving Loan Fund.

Jurisdictional funding is particularly helpful for SEDI businesses because it provides targeted support tailored to their unique challenges, such as limited access to capital and higher barriers to entry, and often includes additional resources like mentoring and technical assistance.

This localized approach ensures that programs can effectively address specific regional needs, fostering inclusive growth and enabling SEDI businesses to compete and thrive in their respective markets.

However, receiving jurisdictional funding can be challenging due to several factors. The application processes can be complex and time-consuming, often requiring detailed business plans, financial records, and proof of eligibility, which can be difficult for small or under-resourced businesses to compile.

Additionally, competition for limited funds can be intense, with many businesses vying for the same pool of resources. Furthermore, navigating the different requirements and criteria set by federal, state, and municipal programs can be confusing and burdensome, especially for businesses lacking administrative support to manage these applications effectively.

But don’t worry. Our Funding Specialists can help you navigate the complexity, complete the paperwork, and find the capital you need to grow your business!