Basic Information
Applicants are required only to attest in question BI-A06 whether or not an Affiliate's sole line of business is the administration of another federal financing program(s) (e.g., the SBA 7(A) loan program) and, if the answer is yes, then identify the program. Affiliates whose sole activity is the participation in other federal financing programs, as evidenced in organizing documents, are presumed to meet the CDFI Certification primary mission requirements and Applicants are not required to include additional information on such Affiliates when completing the Primary Mission section of the Application. Confirmation of an Affiliate’s line of business is subject to review during CDFI Certification compliance checks (e.g., site visits, desk audits). An Affiliate that engages in other activities in addition to the administration of another federal financing program is not covered by this exemption.
1 12 CFR § 1805.104 Affiliate - a company or entity that Controls, is Controlled by, or operates under common Control with another company.
An organization may choose to create a spin-off entity for the purposes of Certification when the organization’s predominant activity is non-financing or non-eligible financing and the organization is therefore unable to meet the Financing Entity criterion for Certification. To be eligible for Certification, the newly created entity (i.e., the spin-off entity):
- must have received a transferred (not purchased) Financial Product portfolio from one or more separate entity(ies) that were Affiliates of the entity at the time the transfer took place and for which the portfolio consists of arm’s-length Financial Product transactions closed by the Affiliate(s); and
- must continue Financial Product activity of the same type as received from the Affiliate(s).
Entities seeking to participate in the CDFI Bond Guarantee Program also may create an Affiliate spin-off entity to do so as part of a proposed Bond Issue. Such entities may need to meet additional parameters and restrictions established via an applicable Notice of Guarantee Availability (NOGA) for a CDFI BG Program application round (see 12 CFR 1805.201(b)(2)(ii)).