Over the past year, the landscape for community climate finance has shifted dramatically. To better understand what that change looks like on the ground, The Kresge Foundation, in partnership with Climate Impact Advisors, interviewed nearly 50 community lenders — CDFIs, green banks, and credit unions — from across the country. The conversations came at an opportune moment, amid broader existential challenges facing CDFIs and the freezing of federal funds, including the Greenhouse Gas Reduction Fund (GGRF).  

Despite this uncertainty, our core takeaway was clear: the underlying business case for climate lending remains strong. Climate resilience and energy efficiency projects save money on energy costs, improve resident comfort and strengthen infrastructure. There is broad demand for this work, and lenders recognize its value. 

Our high-level findings are presented here. To deepen this analysis, The Kresge team partnered with NRDC and University of New Hampshire to analyze over 85 total interviews with community lenders, investors, clean energy project developers and expert stakeholders. This collective effort aims to identify pathways forward for community finance in clean energy lending. Complete findings will be featured in a joint report to be released in early 2026. 

The Two-Speed Reality for Community Lenders 

The recent GGRF disruption has created an immediate funding gap and stalled pipelines for many community lenders — but not all lenders have been affected equally. Instead, a two-speed reality has emerged.  

Larger, national community lenders with established track records in clean energy lending are continuing to move forward. Lending for such projects is already embedded in their broader community development and loan portfolios, and these institutions expect to be especially active in the coming years as key clean energy tax credits, such as the solar Investment Tax Credit, approach expiration. With existing staff capacity, technical expertise and deep relationships, these lenders are well positioned to keep transactions moving. 

Smaller community lenders, by contrast, have been hit much harder. Many were preparing to scale their lending efforts with forthcoming federal resources when progress stalled. These lenders were enrolled in training programs or awaiting technical assistance and capacity-building grants to support staff development, loan operations, product design and pipeline creation. Without access to that foundational support, their momentum has slowed significantly. 

These challenges are compounded in markets where borrower readiness for clean energy adoption is lower, and service provider networks are less developed for such technologies. As a result, the communities that stand to benefit most from lower energy costs and more resilient housing are at risk of falling further behind. 

Beyond the Dollars: Investing in Market Readiness 

In the current environment, the most urgent priority is market readiness. Industry associations, policymakers, and foundations should double down on investments that strengthen the local ecosystem and keep the entire field moving forward.  

1.  Go Hyper-Local with Training and Technical Assistance (TA)

We can leverage strong existing resources, such as the highly regarded clean energy finance trainings from the University of New Hampshire’s Center for Impact Finance, and make these offerings more effective by customizing them to specific regions and cohorts of community lenders. Trainings could reflect local utility costs, state and municipal incentives, and relevant policies, such as community solar rules or building performance standards. 

Equally important is funding the “coach.” Borrowers often need hands-on technical assistance to get projects ready before they ever approach a lender. Supporting experienced TA providers who can help design projects, assess feasibility, and navigate incentives can dramatically improve pipeline for lenders. 

Lenders themselves also need access to ongoing technical support. Beyond one-time trainings, funders could support teams of dedicated TA experts, who can help lenders troubleshoot live deals. When reality hits, lenders want a reliable “hotline” — a place to turn with real-time questions as projects move from concept to closing. 

2. Localization is Key: Building the Local Dream Team

Project success hinges on a coordinated local ecosystem. Policymakers and funders can play a critical role by supporting coalitions and convenings that intentionally break down silos and align local strategies. Pilot efforts through state or regional CDFI coalitions to bring together community lenders, utilities, energy authorities, housing agencies, contractors, and workforce development groups around shared goals. 

3. Do More with Less

Community lenders also need to find smart ways to maximize existing capacity. Technology-enabled tools could support more efficient analysis of clean energy opportunities. Co-lending and loan participation structures can expand exposure to climate lending while managing risk. Industry associations can add value by curating regional resource libraries that lenders can easily access and adapt. 

Critically, many lenders are already financing climate resilience projects without labeling them as such. Every housing or small business loan presents an opportunity to incorporate upgrades that save money over time and strengthen long-term asset performance. This is not a departure from lenders’ core mission or about creating new loan products – it is smart business. 

Keeping Hope Alive 

Periods of uncertainty are not moments to retreat, but opportunities to plan with intention. By focusing now on market-building, coordination and capacity, the field can ensure that more community lenders are prepared to move quickly when the capital starts flowing again. 

With the right groundwork in place, the clean energy lending ecosystem can emerge stronger, more resilient and better equipped to deliver lasting impact for communities. 

Jessica Luk-Li is the founder of Climate Impact Advisors, an advisory firm focused on clean energy financing markets and building decarbonization.