In a major policy reversal, the Trump Administration announced Thursday that it was setting aside $10 billion in the Paycheck Protection Program for loans made by Community Development Financial Institutions.
The administration said that CDFIs already have made $3.2 billion in loans from the second round of PPP lending. Thursday’s decision will set aside an additional $6.8 billion for the institutions to lend.
In announcing the set-aside, the administration said that the decision would ensure that PPP loans reach all communities in need, a “key priority” for President Trump.
Notably the administration has attempted to eliminate the program in each of its budgets. Once the administration tried to rescind funds that already had been appropriated for technical and other support for CDFIs.
However, the program has strong support on Capitol Hill. Treasury Secretary Steven Mnuchin told House appropriators this year that he knew the program had widespread support and would not object to it receiving funds.
“We have received bipartisan support for dedicating these funds for CDFIs to ensure that traditionally underserved communities have every opportunity to emerge from the pandemic stronger than before,” Mnuchin said Thursday.
Small Business Administration Administrator Jovita Carranza said, in announcing the set aside, “CDFIs provide critically important capital and technical assistance to small businesses from rural, minority and other underserved communities, especially during this economically challenging time.”
Officials from Inclusiv, the trade association representing CDFI credit unions, said they have been pushing for the set aside. They said, however, that they are disappointed that the administration has not set aside funds for Minority Depository Institutions. And they said they will continue to push for additional changes to the PPP program to make it more useful for extremely small businesses.
NAFCU President/CEO B. Dan Berger said he was pleased with the decision.
“This decision will allow emergency capital to reach the communities that need it the most during this difficult and uncertain economic period. NAFCU will continue to advocate for additional CDFI funding,” he said.