Community Loan Fund

The Community Loan Fund is a MnCIFA financing product designed to expand access to financing for clean energy projects with financing needs below MnCIFA’s $250,000 minimum loan to a single entity.  

In financing a Community Loan Fund, MnCIFA provides capital to qualified intermediary lenders, such as Community Development Financial Institutions (CDFIs), nonprofit lenders, community banks, credit unions, Tribal lenders, housing finance organizations, and other mission-aligned financial institutions.  

The qualified intermediary lender would then relend the capital to eligible borrowers for projects in clean energy, energy efficiency, electrification, and other criteria under MnCIFA’s green financing qualifications.  

Application process  

Our application process begins with a preliminary review of your proposal for Community Loan Fund financing through a pre-application form with a few basic questions about your financing needs. MnCIFA offers three loan products: Direct loan, community loan fund (revolving loan) and loan loss reserve.  

The pre-application form will help MnCIFA staff understand your proposal and the extent MnCIFA financing could support the Community Loan Fund.

After our preliminary assessment, we may invite you to submit a full application. Proposals that move forward with a full application move through a process similar to a commercial loan from a traditional bank, with due diligence and detailed financials.

Learn more: MnCIFA’s Application Process

Pre-application form: Community Loan Fund

Community Loan Fund

Underwriting considerations and terms

• Project qualifications

MnCIFA will evaluate each prospective intermediary lender to determine whether the organization has the capacity, experience, and controls needed to deploy a Community Loan Fund responsibly. Underwriting considerations include:

• Organizational capacity: Staffing, governance, internal controls, and ability to manage a lending program.
• Lending experience: History of originating, underwriting, closing, servicing, and monitoring loans.
• Financial strength: Audited financial statements, liquidity, net assets, portfolio performance, and repayment capacity.
• Green lending experience: Prior green lending experience is helpful but not required. Lenders without prior experience may still be considered if they can demonstrate lending capacity, borrower demand, and a credible plan to access technical assistance or build internal expertise.
• Compliance and reporting capacity: Ability to track eligible uses, project outcomes, repayments, delinquencies, and required impact metrics.
• Risk management: Policies and procedures to prevent misuse of funds, verify qualified projects, manage borrower risk, and monitor the end-loan portfolio.

Loan Size

• Community Loan Fund financing amounts will be based on lender capacity and MnCIFA available funding.  
• MnCIFA anticipates financing amounts of $1 million to $10 million.  

Tenor (loan term)

A Community Loan Fund have a maximum term of 10 years, subject to MnCIFA underwriting, repayment capacity, project pipeline, risk profile, and final approval.

The revolving loan fund could be cycled into smaller loans for a longer period of time, as long as the intermediary is able to repay MnCIFA for the Community Loan Fund.  

Deployment Period

The deployment period helps MnCIFA confirm that the intermediary’s Community Loan Fund capital is moving into qualified projects within a reasonable timeframe and not remaining unused.

• The intermediary lender would be required to deploy its Community Loan Fund into eligible end loans within 18 to 24 months of first disbursement, unelss otherwise approved by MnCIFA.  
• Deployment progress would be monitored throughout periodic reporting.  
• If the intermediary does not meet approved deployment milestones, MnCIFA may reduce, suspend or recapture undisbursed or unused funds.  

Funding Terms

Final funding terms would be determined through MnCIFA’s review, underwriting and approval process. Terms may vary based on the intermediary lender. Funding terms include:  

• Eligible borrowers: CDFIs, nonprofit lenders, community banks, credit unions, Tribal lenders, housing finance organizations, and other mission-aligned financial institutions.
• Eligible uses: Intermediaries would provide loans based on MnCIFA project qualifications.  
• Reporting: Participating lenders will be required to provide financial, portfolio, compliance, and impact reporting
• Conditions: Funding may be conditioned on due diligence, legal documentation, technical assistance plans, reporting systems, and approval of qualified project criteria. 

Costs

MnCIFA can offer flexible loan terms, under state law. Interest and fees will vary depending on multiple factors. Included as costs for MnCIFA financing:  

• Interest rates: Community Loan Fund interest rates will generally be priced at a fixed rate of at least 3%. A lower rate may be considered for lending strategies that primarily serve environmental justice, historically disadvantaged, Tribal, rural, or other priority communities, subject to underwriting and final approval.
• Origination Fee: A one-time fee to be paid at the time of first disbursement. (1.0% on loan amounts up to $2,000,000, plus 0.5% on any amount exceeding $2,000,000.

Questions?

Send us an email: info.mncifa@state.mn.us.