ELY- President Trump issued an executive order last Friday that put several smaller federal programs on the chopping block. The loss of one of them, the Community Development Financial Institutions Fund, will cut off a source of non-traditional lending available to rural and Indigenous small businesses in the Arrowhead region. Organizations like the Entrepreneur Fund and the Northland Foundation are among those likely to be affected by the order.
The executive order mandated that the programs must “reduce the performance of their statutory functions and associated personnel to the minimum presence and function required by law.” The order went on to give the heads of these programs seven days to report which functions are statutorily required. The order also instructs the Office of Management and Budget to “reject funding requests for such governmental entities to the extent they are inconsistent with this order.”
CDFIs
Community Development Financial Institutions, or CDFIs, provide financing to small businesses in rural and underserved communities through grants, loans, and small business support. The CDFI fund certifies non-governmental lending organizations to invest in local small business start-ups or expansions using a mix of the fund’s money and private investment.
The Arrowhead region has five community development finance institutions, or CDFIs, that fund rural small businesses. In addition to the Entrepreneur Fund and the Northland Foundation, the NorthRidge Community Credit Union, the Embarrass Vermillion Federal Credit Union, and the Minnesota Power Employees Credit Union are all CDFI partners.
Of the five, the Entrepreneur Fund and the Northland Foundation are nonprofit business development organizations that offer a mix of small business development services, consulting, and financing programs for business owners and entrepreneurs in rural markets where mainline commercial financing is not available. Earlier this week, Entrepreneur Fund business advisor for the Ely area, Emily Roose, said the management of her organization was still evaluating how the potential loss or reduction of the CDFI Fund would affect its programs.
Tony Sertich, President and CEO of the Northland Foundation, told the Timberjay, “We don’t know yet what the effect will be on us. As we’ve seen over the past two months, executive orders come and go and change course. Congress will probably also have a say on what happens here. Right now, it’s really up in the air.”
But Sertich said he’s concerned. “Losing CDFI funds will lessen our ability to provide gap loans to small business owners so that they can leverage larger loans from banks to start or grow their business.” Northland has generated $3.8 million in CDFI-funded loans to local small businesses over the last five years.
It’s not clear that President Trump’s efforts to eliminate the CDFI initiative will find support in Congress. The co-chairs of the bipartisan U.S. Senate Community Development Finance Caucus, Sens. Mark R. Warner (D-Va.) and Mike Crapo (R-Idaho), have already issued a statement in support of the CDFI Fund.
“When the CDFI Fund was developed 30 years ago, it was created in the form of a private-public partnership to promote access to capital in our most underserved urban and rural communities,” the senators’ statement read. “Since 1994, the CDFI sector has grown to over 1,400 institutions, located in every state and territory in the nation — and leveraging at least $8 in private sector investment for every $1 in public funding received.”
The Senate’s Community Development Finance Caucus has 28 members, which is more than a quarter of the Senate, evenly split between 14 Democrats and 14 Republicans.
Native American CDFIs
Part of the CDFI Fund is the Native American CDFI Assistance Program, or NACA. This program has provided over $221 million in financing for Indigenous housing and small businesses since 2001. The Treasury Department has certified 69 Native CDFIs which provide financing in Indigenous communities where traditional banking services are lacking.
Trump issued his executive order seven days before the March 21 deadline for NACA’s 2025 funding round, leaving applicants uncertain about the future of their NACA applications.
The Native CDFI Network, a national association of Native American financial institutions, opposed the order. “Native CDFIs are among the most efficient financial institutions in the nation, stretching limited resources to drive economic growth in some of the most rural and remote areas where traditional banks have failed,” wrote network CEO Pete Upton in a statement, adding that the change would be “a devastating blow to economic self-sufficiency in Indian Country.”