Minneapolis launches Alternative Financing Program
In partnership with local community development organizations, the City of Minneapolis has launched a business financing program built on a profit-based model, not an interest-based one. The city’s new Alternative Financing Program (AFP) is designed to meet the needs of Muslims and other groups whose religions prohibit the payment or collection of interest. However, the program will be open to all business owners. Several community development organizations in the Twin Cities have been providing profit-based financing for some time, but the AFP greatly increases the amount of funds available for this form of lending.
According to the City of Minneapolis, the rate of return on AFP loans is “based on an up-front profit payment that is … amortized over the life of the financing.” The city and a private lending partner each provide half the financing, up to $50,000 apiece. Local nonprofit organizations that are already engaged in alternative and small business financing, such as the African Development Center, Neighborhood Development Center and Minneapolis Consortium of Community Developers, will serve as the city’s main lending partners.
AFP funds can be used for building improvements and equipment purchases. All light industrial, neighborhood retail or service businesses in Minneapolis are eligible for the program. Applicants must be creditworthy and in compliance with Minneapolis zoning ordinances, among other requirements. In the case of heavy demand for program funds, priority will be given to applicants who are unable to obtain financing elsewhere. For more information, visit www.ci.minneapolis.mn.us/cped/alternative_financing.asp.
HUD releases national report on homelessness
Three-quarters of a million people are homeless in America on a given night, according to a new report from the U.S. Department of Housing and Urban Development (HUD).
That estimate, published in HUD’s first-ever Annual Homeless Report to Congress, is based on data from two main sources. The first is a count of people who used emergency or transitional housing services at any time during a three-month period from February to April 2005. The count was obtained from a nationally representative sample of 80 communities that have implemented Homeless Management Information Systems, an electronic data system that collects information about people who access homelessness services. The second main data source is a one-night count, conducted in January 2005, of sheltered and unsheltered homeless people in 3,800 cities and counties nationwide.
The counts indicate that on a given night in the U.S., there are approximately 415,000 homeless people living in shelters. A demographic analysis of this group reveals 59 percent are minorities and 45 percent are African American. Nearly 25 percent are minors. A full 25 percent of sheltered homeless adults have disabilities, such as severe mental illness or chemical dependency, and 19 percent are military veterans. An additional 339,000 homeless people are living in locations not fit for habitation, such as streets, encampments and abandoned buildings, bringing the total estimated homeless population to 754,000.
HUD cautions that these results are imperfect due to possible sampling errors and other limitations of the data sources. The agency predicts greater accuracy in future reports, as methods of collecting data on homelessness continue to improve. To access the report, visit www.hud.gov/offices/cpd/homeless/ahar.cfm.
CFED issues IDA survey results
CFED has issued a report summarizing the results of its latest survey of individual development account (IDA) activity in the U.S. IDAs are matched savings accounts designed to help low-income people build assets and meet specific financial goals, such as purchasing a home. Accounts are offered through nonprofit organizations, working in partnership with community banks, credit unions and other financial institutions. The savings match comes from public and private sources. The single largest fund provider is the federal government’s Assets for Independence (AFI) program.
The CFED report, which emphasizes publicly funded accounts, is based on a March 2005 survey of 400 of the 540 IDA programs operating in the U.S. According to the survey results, the cumulative total of public funding for IDAs was $225 million as of March 2005. More than 30,000 people had savings in IDAs. Slightly more than half of account holders were female and 80 percent were minorities. Among individuals with AFI-funded accounts, the average savings balance was $531 and the most common savings goals were home purchase, small business start-up or expansion, and post-secondary education.
For more on IDAs, visit www.cfed.org. |
Annual Report
