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  • CU Strategic Planning

NCUA’s MDI Mentoring Grant and the CDFI Minority Lending Program Grant: What’s the Difference?

On Oct. 12, the NCUA announced it has opened the doors for credit unions with both a low-income and minority depository institution designation to apply for the National Credit Union Administration’s MDI mentoring grants now through Oct. 29. These are not the long-awaited $1.75 billion CDFI grants, referred to as the Emergency Support & Minority lending Program.

“We try to look out for any credit union’s bottom line,” said Stacy Augustine, CU Strategic Planning’s President/CEO. “Eligible credit unions should consider applying for these grants on their own because the grants were designed by the NCUA as a readily accessible resource.”

So what’s the difference, then, between the NCUA program and the Treasury Department’s Minority Depository Institution grants that are still to come?

NCUA MDI Mentoring Grants

The 2021 Community Development Revolving Loan Fund (CDRLF) Grant Round will provide approximately $100,000 to low-income credit unions for the Minority Depository Institution Mentoring initiative. NCUA states the purpose of the MDI Mentoring initiative is to encourage strong and experienced credit unions to provide guidance to small MDI credit unions to increase their ability to thrive and serve low-income and underserved populations. Funding approval, up to $25,000, will be based on the applicant’s ability to demonstrate a well-developed plan for the mentoring assistance it would receive from the mentor credit union.

Not to worry: NCUA put safeguards in place via a contract that the mentor will not merge with the mentee credit union for at least five years after the mentorship, which lasts 12 months. Awardees and their mentors must commit to participating in a cohort that will receive training and technical assistance from the NCUA throughout the project period. These awards will be announced by the NCUA on Dec. 15. 2021. More information is available at the NCUA’s website.

CDFI Grants – the Emergency Support & Minority Lending Program

At the end of 2020, President Donald Trump signed the Coronavirus Response and Relief Supplemental Appropriations Act of 2021 (H.R. 133) into law, which provides for more than $12 billion in supplemental appropriations toward banks and credit unions certified by the Treasury Department as Community Development Financial Institutions.

One of the initiatives under this appropriation is to make low-cost, long-term capital investments to MDIs and other CDFI minority lending institutions. According to the Office of the House Financial Services Committee, $1.75 billion of these funds will be available to provide additional grants and financial assistance to depository and non-depository CDFIs, including $1.2 billion earmarked for the minority lending institutions category. MDIs are defined as predominantly serving minority communities or meet other standards for accountability to minority populations as determined by the CDFI Fund.

CU Strategic Planning’s grant writing services are focused on those applications requiring technical expertise and in-depth knowledge of the US Treasury CDFI Fund, and we expect the Emergency Support & Minority Lending Program applications to require that expertise. We are awaiting the announcement from the Treasury about this program, and will be ready to serve our clients the day the program opens.

The Impact of MDIs

MDIs have a long history in the U.S. of lending to communities of color. While regulators have a mandate to preserve and promote MDIs, the number of MDI banks (143 as of September 30, 2021) and MDI credit unions (509 as of June 30, 2021) has declined by about one-third over the decade following the 2008 Great Recession. Additionally, 1,163 CDFIs embrace a similar mission of delivering affordable lending options to economically disadvantaged communities, especially those in low- to moderate-income and minority communities.

The disproportionate impact of the COVID-19 pandemic further disadvantaged these vulnerable communities, but CDFIs and MDIs maintained their focus on helping businesses in their target areas minimize the economic effect.

Get Assistance for the Process

CDFI experts are the heart of CU Strategic Planning, and we can work with your credit union every step of the way, from determining eligibility to winning CDFI MDI and other financial assistance grants. Let us show you how we can help your credit union.


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