CDFIs must dedicate 60% of their financing activities to eligible Target Markets. For Applicants wishing to use a customized Investment Area or a non-Metro county or parish Investment Area, activity in individually non-qualifying census tracts may be counted toward the 60% threshold if certain additional conditions are met.
An Applicant with a customized Investment Area Target Market must direct at least 85% of its customized Investment Area financing activity, in both number of and dollar volume of transactions (or unique account holders if relying on the Financial Services option), within the individually qualified census tracts of that customized Investment Area. If the 85% threshold is met, then the Applicant can count activity in the non-qualifying tracts of the customized Investment Area toward the 60% Target Market benchmark..
The requirement to direct at least 85% of customized Investment Area activity within the individually qualified census tracts of the Investment Area geography ensures an Applicant serving such a geography still directs at least 51% of its financing activity within qualifying census tracts, given that the Applicant’s financing activity outside of its Investment Area geography may be directed entirely to non-qualifying census tracts. For example, if the Applicant directs 60% of its Target Market activity within a customized Investment Area, and 85% of that activity within the individually qualified census tracts of the customized Investment Area, 85% x 60% = 51%. This means that up to 49% of the Applicant’s combined Target Market and non-Target Market investments may be directed to non-qualifying areas. The benchmarks must be met without any rounding of decimal points, i.e., 84.9% will not be rounded to 85% for Certification purposes.
While the overall Target Market threshold is still 60% when using a customized Investment Area, the 51% in the example above represents the minimum amount of an Applicant's total activity that would need to be within qualified tracts if an Applicant had a Target Market consisting only of customized Investment Areas and had no eligible activity outside of those Investment Areas, either in pre-qualified tracts or directed to a Targeted Population.
Non-Metro customized Investment Area, county, or parish: Prior to October 1, 2027, an Applicant that serves a non-Metro customized Investment Area,10 county, or parish must direct at least 75% of its Financial Product and/or Financial Services activity, in both number of and dollar volume of transactions (or unique account holders if relying on the Financial Services option), in such Investment Area within the individually qualified census tracts of the respective non-Metro geography in order for activity in the non-qualifying tracts of the Investment Area to count towards the 60% Target Market benchmark.
Beginning October 1, 2027, an Applicant that serves a non-Metro customized Investment Area, county, or parish Target Market must direct at least 85% of its Financial Product and/or Financial Services activity in such Investment Area(s) within the individually qualified census tracts of the respective non-Metro geography in order for activity in the non-qualifying tracts of the Investment Area(s) to count towards the 60% Target Market benchmark.
See Question 51 for additional discussion on options if an entity is unable to direct the minimum level of financing activity to individually qualified census tracts within a customized Investment Area or non-Metro county or parish Investment Area.
10 A non-Metro customized Investment Area must consist exclusively of non-Metro geographic units.