The Biden Administration announced Tuesday it has awarded 244 Community Development credit unions a total of $401.8 million to help the institutions and the communities they serve recover from the economic problems caused by the coronavirus crisis.
Vice President Kamala Harris announced the awards, which were part of a $1.25 billion package awarded to 863 Community Development Financial Institutions across the country.
The funds were provided by Congress in the economic stimulus package enacted in December. They come from the Treasury Department’s CDFI Rapid Response Program.
“We have the opportunity to take stock of where we are and where we’re going,” Harris said, adding that small businesses do not simply need relief, they also need capital.
Treasury Secretary Janet Yellen said that by one measure, every dollar injected into a CDFI catalyzes $8 more in private-sector investment. “Because in serving places that the financial sector historically hasn’t served well, they lift our whole economy up,” Yellen said.
The grant funds may be used for a variety of purposes, including enabling CDFIs to build capital reserves and loan-loss reserves. “These awards provide CDFIs with an unprecedented level of flexible capital to help distressed and underserved communities across the country take meaningful steps towards recovering from the debilitating economic impacts of the COVID-19 pandemic,” said CDFI Fund Director Jodie Harris.
House Financial Services Committee Chairwoman Maxine Waters, D-CA., said that she will continue to push for increased CDFI funding. “I see this investment as a down payment on what we need to restore our [Minority Depository Institutions] and to support our CDFIs,” she said.
The administration’s effort to boost CDFI funding is a huge change from the Trump Administration, which sought to eliminate the program in each of its annual budgets.
“The rightful attention CDFIs are receiving – particularly the announcement coming from the vice president from the White House – has been spectacular and well deserved,” said Stacy Augustine, CEO of Credit Union Strategic Funding, a company that assists CDFI credit unions apply for federal funds. Augustine said that the company helped 65 credit unions obtain $115.2 million as part of Tuesday’s funding package. She said that amount nearly matches the company’s 12 years of work with CDFI credit unions.