Pathway Lending helps our partners (and their clients) do more

Pathway Lending is a nonprofit CDFI serving Tennessee and Alabama. We support partners like economic developers, business advisers, realtors, and many others throughout the region. We provide a source of capital for underserved borrowers who may not qualify for traditional lending and business education solutions to strengthen your customers’ bankability.

CDFIs: Socially conscious and fiscally responsible

Learn more about the CDFI industry and how CDFIs like Pathway Lending can help you and your customers. Visit our Loan Catalog for more information on the types of loans we offer, or keep reading for more information on how we help our partners everyday.

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What is a CDFI graphicWhat is a CDFI?

A Community Development Finance Institution, or CDFI, is a class of financial institution that caters to underserved and often low-income communities. CDFIs are certified by the Treasury Department and can be banks, credit unions, venture capital funds or loan funds – like Pathway Lending. Ignore the ungainly name, because institutions like ours can provide a lifeline for entrepreneurs.

CDFIs are laser-focused on community, and typically target their funding on small businesses, micro-enterprises, commercial real estate, and affordable housing within a particular geographic region. Pathway Lending serves communities across all of Tennessee and Alabama.

Pathway Lending operates a revolving loan fund that makes affordable loans to small business owners and micro-entrepreneurs that might not otherwise qualify for a bank loan. Like old-fashioned bankers, we provide a high-touch model, and funding often comes with mentoring and other support (that’s one reason why our loan portfolio has held up relatively well throughout the financial crisis and recovery).

We typically raise the money we lend through grants or EQ2s from banks looking to satisfy their CRA requirements.  Since 1999, we have originated more than $175 million in loans to small businesses.

Need more reasons to refer your clients to a CDFI like Pathway Lending? Our services are:

  • Great for entrepreneurs and organizations that cannot access bank loans or other capital
  • Long-term with the goal to make small businesses and micro-entrepreneurs to be bankable
  • Socially responsible with a high-touch model with mentoring support and technical training
  • Fiscally responsible – under no circumstance do we support predatory lending practices
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How can Pathway Lending help small business borrowers?

Research shows that minority-owned, lower-income, and rural businesses have difficulty accessing capital. In particular, individuals with limited equity, collateral, credit, and/or business experience often struggle to obtain affordable loans. These borrowers typically cannot satisfy the underwriting criteria of man mainstream lenders, and as a result, these entrepreneurs frequently rely on credit card financing, predatory loans, and capital infusions from families and friends. These sources not only limit their prospects for growth, but also threaten their long-term financial health.

Community development financial institutions (CDFIs) like Pathway Lending are uniquely positioned to address this challenge by offering both affordable loan capital and the technical assistance that is crucial to successful small and emerging businesses.

CDFIs are a great partner to small business advisers, and together, we make more possible for borrowers.

Pathway Lending can provide a way to help a client that does not meet a traditional bank’s underwriting requirements. It’s a great way to help your customers by referring them to a lender that could meet their financial and educational needs, while you retain the depository relationship. These referral relationships can be a win-win for both parties, and we aren’t the only ones who think so.

In 2015, the CDFI Fund issued two independent reports that provide the first-ever comparative analysis and evaluation of the effectiveness of CDFIs. The findings confirm that CDFIs, like Pathway Lending, are resilient and a reliable resource for capital in areas that need it the most.  Since 1999 we have originated over $175 million and provided more than 36,000 hours of advisory services to strengthen Tennessee’s small business community.

Linked Articles:
CDFIs Stepping into the Breach: An Impact Evaluation—Summary Report http://scholars.unh.edu/cgi/viewcontent.cgi?article=1235&context=carsey
Risk and Efficiency among CDFIs: A Statistical Evaluation using Multiple Methods https://www.cdfifund.gov/Documents/Risk%20and%20Efficiency%20among%20CDFIs%20Report.pdf
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Filling the small dollar loan gap graphicWill Pathway Lending offer small dollar loans to my clients?

Why would a consumer go to high-interest online lender to get small dollar loans— and in the process rack up hundreds or thousands of dollars in debt—rather than to banks? The answer is that most banks simply don’t or can’t offer small dollar (under $100,000) loans to many of their business borrowers, especially startups. For many banks, it doesn’t make good business sense given the considerable staff time, systems, and oversight needed to issue and document loans for such a small amount.

Small dollar loans can provide much needed capital to low-income, low-wealth consumers and small businesses and startups.

At Pathway Lending, we have made it a priority to fill financial gaps in the market. As such, small dollar loans, those under $100,000, make up a majority of loans in our portfolio. Whether it’s for equipment, working capital needs, or just a line of credit, Pathway Lending can help entrepreneurs with their small dollar needs, and help them grow their business.

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How is Pathway Lending helping to create financial fluency for small business owners?Creating financial fluency graphic over photo of woman

CDFIs like Pathway Lending serve a diverse group of businesses operated by women, minorities, low-income and rural demographics, comprising largely of businesses that would not otherwise qualify for traditional bank loans, those needing small dollar loans, or those in need of business education. This combination of in-depth business education and flexible capital creates value for our customers and allows for funding opportunities and solutions that would otherwise be unsupported by traditional, risk-adverse financial institutions. This educational framework creates the foundation for success, leading many of these small businesses to become ideal future borrowers at traditional institutions.

By providing opportunities for financial fluency, rather than just funding, Pathway Lending moves small businesses forward toward their goals.

We achieve this by providing a wide range of services, including in-depth business counseling, classroom training, and peer-to-peer learning to help entrepreneurs start, expand, and successfully manage their businesses.

Most of our classes, events and counseling are offering through Pathway Women’s Business Center and are available to anyone. Visit our calendar of events to connect your clients to the right events, mentorships and resources essential for them to reach their goals.

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How does Pathway Lending strengthen the community?Strengthening the community graphic over photo of Jackson Kayak

As a mission-driven lender, Pathway Lending provides credit and financial services to people and communities traditionally underserved by mainstream commercial banks and lenders. We offer a range of financial products and educational services to support small businesses and help them capitalize on new growth opportunities.

Community Development Financial Institutions (CDFIs) like Pathway Lending add value by bringing innovative financing and educational tools to the marketplace. Our unique position in the credit market allows us to support projects that mainstream financial institutions may consider too risky or need gap financing, in combination with investments from government, philanthropic, or bank partners.

CDFIs play a critical role in building community wealth in several key ways:

  • We provide much needed capital and financial services to people and communities that typically are not served by traditional financial institutions. Reflecting this, CDFIs are credited with investing billions of dollars in low-income areas.
  • Our loans often enable community members to purchase, start, or grow a locally-based business, and assist in the development of affordable housing, community facilities, and other critical community programs.
  • We play a significant role in community wealth building. We are non-predatory and our services help businesses improve their core competencies, capture new opportunities, and become more bankable over time.
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