Kentucky Highlands Investment Corporation (KHIC) is a Community Development Financial Institution. CDFI’s play a crucial role in supporting underserved communities and fostering economic development across the United States. These specialized financial institutions have a unique history, distinct mission, and notable differences from traditional commercial banks.

CDFIs emerged in response to the challenges faced by low-income and minority communities in accessing mainstream financial services. The concept gained traction during the 1960s and 1970s as community activists and policymakers recognized the need for targeted financial resources to address poverty, urban decay, and rural decline. In 1974, the first CDFI, ShoreBank (now Urban Partnership Bank), was established in Chicago, setting a precedent for other institutions focused on community development. CDFIs differ from traditional commercial banks in several key ways. While both institutions offer financial products and services, CDFIs prioritize community impact and job creation over maximizing profits.

The passage of the Community Development Banking and Financial Institutions Act in 1994 marked a significant milestone for CDFIs. This legislation provided federal recognition and support for CDFIs, offering financial assistance and resources to expand their reach and impact. Since then, the number of CDFIs has grown steadily across the country. KHIC was the first organization in Kentucky to receive this federal recognition.

The most recent data shows that over 1,100 certified CDFIs operate throughout the United States. These institutions vary in size and scope, ranging from local credit unions and community banks to more significant loan funds and venture capital providers. Each CDFI serves a specific geographic area or demographic group, tailoring its services to meet the unique needs of its community.

In the state of Kentucky, there are several CDFIs actively engaged in community development efforts. These institutions include KHIC, Fahe, Mountain Association, SKED, and Community Ventures. These organizations focus on providing financial services, business development support, affordable housing solutions, and job creation initiatives in underserved areas of the state.

KHIC participated in many federal, state, and private programs to obtain the monies needed to re-lend. Because each source has unique costs, quoting a set interest rate is impossible. Instead, every project’s need is evaluated on its merits and relevance to a particular funding source. Only after much discussion can KHIC extend the terms of its lending products. It begins with an inquiry form initiated with the Apply Now for Financing Button.

Community Development Financial Institutions (CDFIs) have evolved into a critical component of the American financial landscape, providing vital resources and support to underserved communities. With a strong emphasis on social impact and community development, CDFIs complement the services offered by traditional banks and play a vital role in promoting economic equity and opportunity across the United States.