Opportunity Zone Magazine Volume 1, Issue 3 - Page 20

20 OPPORTUNITY ZONE MAGAZINE | VOLUME 1 • ISSUE 3
HOW COMMUNXITY DEVELOPMENT FINANCIAL INSTITUTIONS
CAN PARTICIPATE IN THE OPPORTUNITY ZONE PROGRAM
communities. The program is administered by the U.S.
Department of Treasury’s Community Development Financial
Institutions (CDFI) Fund.
THE CDFI BOND GUARANTEE PROGRAM
This program provides CDFIs access to a significant source of
capital. By providing guarantees of bonds issued by certain
qualified bond issuers, the CDFI Bond Guarantee Program
injects new and substantial capital into the nation’s most
distressed communities. CDFIs can gain from the potential
scale of the CDFI Bond Guarantee Program, which offers longterm
credit at below-market interest rates. The CDFI’s bond
issuers can issue a minimum of $100 million so they can provide
loans for smaller CDFIs for a minimum of $10 million for each
CDFI. OZ funds can partner with larger CDFI’s bond issuers to
provide the equity investment, since the CDFI’s investment,
with a guarantee from the federal government, could be a great
way for OZ funds to invest in OZ communities. These bonds
are 100 percent guaranteed by the U.S. government. But the
program does not offer grants or direct loans, but instead is a
federal credit subsidy program.
CDFI funds and OZ funds together can play an important role
of increasing capital in underserved and lower income
communities. By partnering together, they can realize the true
purpose of the OZ legislation, helping to provide capital in
those underserved communities.
lower income or underserved communities. The awards also
help banks and thrifts offset some of their risk and meet capital
ratio requirements. The BEA program provides up to $100,000
for the Technical Assistance Program to provide training,
financial literacy courses, and housing counseling. The
Financial Assistance Program provides up to $2 million for
housing and business development loans to low-income
communities. The Financial Assistance Program provides
grants and matching dollars, which OZ funds can provide the
matching equity investment to invest in low-income
The Financial Assistance Program
provides grants and matching dollars,
which OZ funds can provide the
matching equity investment to invest
in low-income communities.
Jerry McGaughy, a principal with the Epic Community Impact
Fund, has been advocating for CDIF Funds for years. With
over 12 years of experience in community lending, investment
and community development consulting, McGaughy was the
founder of the Atlanta-based BusinessLINC Community Loan.
He developed and managed the National BusinessLINC Coalition
in Washington, D.C. McGaughy facilitated a joint venture
partnership with a global real estate private firm to create the
Epic/Virtua Opportunity Zone Fund I, a $100 million Opportunity
Fund to provide investments in projects located in Atlanta’s
designated OZ communities. He received his bachelor’s in
finance and economics from Howard University.
OPPORTUNITYZONE.COM