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Community lenders and CDCs press for more state CDFI and microloan funding; warn of predatory receivable‑based loans
Summary
CDFIs, community development corporations and coalition groups told the committee they need more stable state funding for small business technical assistance and microloans and described predatory point‑of‑sale cash‑advance products and the chilling effect of recent ICE activity on foot traffic.
Representatives of Massachusetts community development corporations (CDCs), community development financial institutions (CDFIs) and coalition groups told the Joint Committee that state‑level investments are required to sustain small business technical assistance (SBTA), microloan programs and CDFI capital as federal funding becomes uncertain.
"We ask the committee to continue supporting the increase of state level funding for the small business technical assistance program... or consider creating a technical assistance stabilization fund to ensure continuity of services in times of federal volatility," Yadi de Jesus, director of economic development at the Massachusetts Association of CDCs, told the committee.
Kimberly Lyle, CEO of Dorchester Bay Economic Development Corporation (a CDFI), described how her organization makes small loans — "We lend anywhere from $5,000 up to $250,000 ... We don't have a minimum credit score" — and urged more state support so mission‑based lenders can continue filling gaps banks will not. Tracy Whitfield of the Coalition for an Equitable Economy asked the legislature to restore specific microgrant line items cut from budgets and to increase the state CDFI appropriation.
Speakers also described a lending product that some businesses use as a last resort: receivables‑based or point‑of‑sale cash‑advance loans. Lyle said those platforms "can make rapid loans to those businesses... and those costs are exorbitant," and that some merchants seek CDFI loans specifically to escape that cycle.
Community groups also reported that recent immigration enforcement actions have reduced foot traffic in immigrant‑heavy neighborhoods. "Communities like New Bedford, Chelsea, East Boston, Lowell, Worcester... are reporting reduced foot traffic and consumer activities due to fear of current ICE raids," Yadi de Jesus said; Nicole Lobe of the Black Economic Council of Massachusetts and Alyssa Ramos (BECMA) reported survey responses that businesses have had to find new suppliers, increase prices, pause or close operations as a result of tariffs and related disruptions.
Why it matters: Nonprofit lenders and technical assistance providers say their clients are disproportionately micro businesses and entrepreneurs of color who cannot access conventional bank financing; state funding may be the only readily available source if federal CDFI support is cut.
Ending: Speakers asked the committee to prioritize funding for CDFIs, SBTA grants, the Boundfields redevelopment fund and rural development programs and offered to provide additional documentation and data on predatory loan products.
