Community development loans aid individuals and businesses in economically disadvantaged areas, including home ownership loans, funds for promotional programs, education, public services, business loans, and grants. The goal is to encourage development in rural areas, provide affordable housing, prevent homelessness, and offer quality jobs and community resources. Utility companies can also receive financial assistance to upgrade or build adequate networks in remote communities.
Community development loans help individuals and businesses improve and raise the overall quality of life in economically disadvantaged cities. Some of the main types of community development aid include home ownership loans, funds for promotional programs, and education and development of public services. Other common types include business loans and grants. The primary goal of this type of aid is to encourage the development of rural locations that may not be as attractive as larger cities.
Various community development loans attempt to give low-income individuals and families access to affordable housing. Most of these programs help make homeownership a possibility for those who may not have adequate income or savings. Some of them allow families to substitute manual labor for part of the down payment amount. These loans and financing programs cover the costs of financing a home purchase and provide additional guarantees to lenders.
Some housing assistance comes in the form of rental assistance or government subsidized payments to prevent homelessness. Public housing developments and subsidized rental communities also help give residents affordable alternatives to substandard housing conditions. Subsidized rental communities are generally built to the same standards as more expensive complexes, but offer a below-market rental rate. The government provides community owners with an illegal payment and income restrictions may apply to prospective residents.
Community development loans are also provided to businesses to encourage construction and expansion. Tax incentives and other forms of financial assistance may be offered to businesses considering rural community locations for plants and offices. These loans help ensure that local residents have access to quality jobs and do not have to move or travel to find gainful employment. Another type of community development assistance directed at businesses encourages the development of social assistance programs such as financial education and public facilities.
One of the concerns in a rural or poverty-stricken community is the lack of community resources. Economic development incentives also encourage medical facilities, libraries, school districts, universities, and recreation centers to locate in specific areas. Educational programs that teach residents financial planning, job search skills, and life development skills are of great interest to community planners.
Utility companies may also be targeted for community development loans. Financial assistance is provided to electric and gas companies to upgrade, maintain, or build adequate utility networks. Remote communities may need plumbing, cable television, and adequate levels of electricity. Community development loans can help utility companies offset some of the expenses associated with building new facilities and extending existing networks to locations that would not otherwise be viable.
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