Now that the Trump Administration has agreed to set aside $10 billion from the Paycheck Protection Program for loans made by Community Development Financial Institutions, Democrats are pushing the administration to do the same for minority institutions.
“This is a good first step, but the Administration should act on our additional recommendations to set aside funds for Minority Depository Institutions (MDIs) and help more CDFIs make PPP loans in their communities,” said Sherrod Brown of Ohio, the ranking Democrat on the Senate Banking Committee.
The Treasury Department and the Small Business Administration last week announced that they would set aside $10 billion from the PPP for loans to be made by CDFIs. Following that announcement, advocates renewed their push to set aside money for loans made by Minority Depository Institutions.
The House Financial Services Committee is holding a hearing Wednesday on “promoting inclusive lending during the pandemic,” with a focus on community development and minority institutions. Committee chairwoman Maxine Waters (D-Calif.) also has called for a $10 billion set aside for minority institutions. “MDIs play a key role in providing access to credit in minority communities, and it is critical that additional PPP funds be dedicated for lending by these institutions,” she said.
MDIs have a history of serving small businesses whose owners were “socially and economically marginalized” even before the pandemic, said Ashley Harrington, federal advocacy director and senior counsel for the Center for Responsible Lending. “MDIs are in a good position to serve this sector and must be included in the set-aside funding,” Harrington added.
MDIs are among the smallest financial institutions in the country. The NCUA reported that at the end of 2018, about 10% of all federally insured credit unions were MDIs. They served 3.9 million members and 87% of them had total assets of $100 million or less.