Ruben Alonso, CEO of AltCap, a community development financial institution (CDFI) based in Kansas City, Missouri, is working to improve access to capital for entrepreneurs and small businesses in underserved Kansas communities.
In a recent Kansas Reflector podcast, Alonso emphasized the role of CDFIs in reaching those overlooked by traditional lenders, such as minority-owned businesses, women entrepreneurs, and residents in historically redlined areas.
What Are CDFIs?
Community Development Financial Institutions (CDFIs) are mission-driven lenders established by the U.S. Department of the Treasury to help underserved populations access financial resources.
Alonso explained that out of 1,500 CDFIs across the U.S., many focus on small business loans, microloans, community projects, or tax credit financing.
CDFIs operate outside the traditional banking system but often partner with banks to fill financial gaps in low-income or disadvantaged areas.
Kansas Faces Limited CDFI Reach
Although Missouri has received 288 CDFI awards, Kansas has only received 19, placing it behind neighboring states like Colorado and Oklahoma.
Alonso described Kansas as a “CDFI desert,” and noted that AltCap is now partnering with the Kansas Small Business Office to increase awareness of funding options. The goal is to expand economic opportunities by bringing capital to people and places previously left out.
Focus Areas: People-Based and Place-Based Lending
Alonso emphasized two core pillars of CDFI lending:
- People-Based: AltCap aims to address historic lending disparities, particularly those affecting women and entrepreneurs of color. For example, women often receive less funding at higher interest rates than male counterparts. CDFIs seek to level the playing field.
- Place-Based: The legacy of redlining has left many neighborhoods without adequate financial investment. CDFIs work to reverse these effects by targeting investments in these areas, promoting economic and environmental equity.
Flexible Lending Criteria
Unlike banks, CDFIs do not rely solely on credit scores when evaluating loan applications. Instead, they take a holistic approach, examining the context behind low scores and prioritizing the entrepreneur’s potential.
Alonso noted that AltCap often refinances high-interest online loans to relieve small business owners of unsustainable debt burdens.
AltCap and other CDFIs play a crucial role in expanding financial access to overlooked individuals and communities, especially in Kansas.
Through partnerships, flexible lending, and educational outreach, CDFIs help entrepreneurs build sustainable businesses and foster long-term economic resilience.