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Capital for Change, a Wallingford-based community development financial institution, has received $1 million in new funding from Liberty Bank for an ongoing effort to help underserved populations in Connecticut.

“These funds will provide capital to expand our lending capital base and to help Capital for Change raise additional support for its community-development activities,” Charles Bodie, Capital for Change’s chief financial officer, said in a statement.

The funding is being made through a financing instrument that functions like an equity investment. The financing instrument is called Equity Equivalent, or EQ2, a capital product for CDFIs and their investors, Bodie said.

“This tool allows community development financial institutions to strengthen their capital structures, leverage additional debt capital and, as a result, increase lending and investing in economically disadvantaged communities,” he said.

Bodie added that the investment can be renewed annually and requires interest payments during its term, often below market rates.

The funds are expected to be distributed as loans in Connecticut, with a specific focus on the Greater New Haven area, Bodie said. He added that organizations that provide services to low- and moderate-income people or households in Greater New Haven are expected to receive priority for these loans.

The Community Foundation for Greater New Haven, the region’s largest grant-making organization, has agreed to provide a 50 percent guarantee for loans made from the funds, Bodie said.

“As a way to enhance this new investment with additional leverage and support, we felt it was important to stand behind and guarantee a portion of the resulting loans, so Capital for Change would continue to do more and build on the achievements they’ve made in this area,” A.F. “Drew” Alden, the Community Foundation for Greater New Haven’s senior vice president and chief investment officer, said in the statement. “We think it’s important to do that.”

David W. Glidden, president and CEO of Middletown-based Liberty Bank, said in the statement that the bank’s mission “is to improve the lives of our customers, teammates and communities for generations to come.”

Glidden said the bank creates partnerships with organizations such as Capital for Change and the Community Foundation for Greater New Haven as part of that mission.

“This unique investment to establish the loan fund will go a long way in helping nonprofits, particularly in Greater New Haven, continue to do what they do best, make our communities a better place to live and work, improve the well-being of individuals and families and form lasting partnerships with other organizations that share the same sense of purpose,” Glidden said.