A coalition of supporters of the Community Development Financial Institutions program has asked Congress to set aside $1 billion for the program in the next coronavirus economic relief measure.
In a letter to congressional leaders, the groups, including CUNA, contend that federal financial relief funding is not reaching small businesses and families that are not served by mainstream lending institutions. CUNA noted that there are 324 CDFI-certified credit unions across the country.
“CDFIs provide financial services in urban neighborhoods and rural areas underserved by traditional financial institutions, including those with high rates of poverty and unemployment,” the groups said in the letter.
They said that during the last economic downturn, CDFIs served as “economic shock absorbers.” They added that “While traditional lenders fled economically distressed communities, CDFIs stepped in and filled the void.”
Congressional Democrats have been pushing for supplemental appropriations for the CDFI program, but have not succeeded in getting the funding added to coronavirus relief measures. Congress has authorized CDFI set-asides for the Paycheck Protection Program, under which financial institutions may lend to small businesses to keep their doors open. However, lawmakers have not included increases in CDFI grants.
The CDFI program always has been popular on Capitol Hill, where, in FY20, the program received $262 million, an increase of $12 million over the previous year. However, in each of its budgets sent to Congress, the Trump Administration has proposed eliminating the program, contending that it had achieved its purpose of raising capital for projects in underserved areas.
In testimony during appropriations subcommittee hearings, Treasury Secretary Steven Mnuchin has said the administration would not object to having the program funded and conceded that it is popular among lawmakers and will not be eliminated anytime soon.