The following list of common terms and definitions are used on our site and you may wish to familiarize yourself with them. This list is not all-inclusive and will be regularly updated as needed.
CDFI - Community Development Financial Institutions (CDFIs) are private financial institutions that are 100% dedicated to delivering responsible, affordable lending to help low-income, low-wealth, and other disadvantaged people and communities join the economic mainstream. By financing community businesses—including small businesses, microenterprises, nonprofit organizations, commercial real estate, and affordable housing—CDFIs spark job growth and retention in hard-to-serve markets across the nation. CDFIs are profitable but not profit-maximizing. They put the community first, not the shareholder. For more than 30 years, they have had a proven track record of making an impact in those areas of America that need it most.
MDI - Minority Depository Institution (MDI) is a formal federal designation for banks and credit unions that are either owned or directed primarily by African Americans, Asian Americans, Hispanic Americans, or Native Americans. Under federal law, certain government agencies, such as the Federal Deposit Insurance Corporation (FDIC), are required to help preserve existing MDIs and encourage the establishment of new ones.
Socially and economically disadvantaged individuals (SEDI) - Owned businesses are defined as: business enterprises which certify that they are owned and controlled by individuals that have had their access to credit on reasonable terms diminished as compared to others in comparable economic circumstances, due to their (1) membership of a group that has been subjected to racial or ethnic prejudice or cultural bias within American society, (2) gender, (3) veteran status, (4) limited English proficiency, (5) physical handicap, (6) long-term residence in an environment isolated from the mainstream of American society, (7) membership of a federally or state recognized Indian Tribe, (8) long-term residence in a rural community, (9) residence in a U.S. territory, (10) residence in a community undergoing economic transitions (including communities impacted by the shift towards a net-zero economy or deindustrialization), or (11) membership of another “underserved community” as defined in Executive Order 13985; business enterprises which certify that they are owned and controlled by individuals whose residences are in CDFI Investment Areas, as defined in 12 C.F.R. § 1805.201(b)(3)(ii); business enterprises which certify that they will operate a location in a CDFI Investment Area, as defined in 12 C.F.R. § 1805.201(b)(3)(ii); or business enterprises that are located in CDFI Investment Areas, as defined in 12 C.F.R. § 1805.201(b)(3)(ii).
Origination Fee - An origination fee is an upfront fee charged by a lender to process a new loan application. The fee is compensation for executing the loan. Loan origination fees are quoted as a percentage of the total loan. Sometimes referred to as “discount fees” or “points,” particularly when they equal 1% of the amount borrowed, origination fees pay for services such as processing, underwriting, and funding.
Term Loan - A term loan provides borrowers with a lump sum of cash upfront in exchange for specific borrowing terms. Term loans are normally meant for established small businesses with sound financial statements. In exchange for a specified amount of cash, the borrower agrees to a certain repayment schedule with a fixed or floating interest rate. Term loans may require substantial down payments to reduce the payment amounts and the total cost of the loan.