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David Black, Community Development Expert, OCC
The Consolidated Appropriations Act, 2021, established emergency programs to revitalize and provide long-term financial products and services for low- and moderate-income and minority communities disproportionately affected by the COVID-19 pandemic. Two of these programs provide capital to community development financial institutions (CDFI) and minority depository institutions (MDI) for loans, grants, and forbearance to small and minority-owned businesses and consumers. Another program provides grants to CDFIs to expand lending, grant-making, or investing in low- or moderate-income minority communities and to minorities who have significant unmet capital or financial service needs.
The Emergency Capital Investment Program (ECIP) enables the U.S. Department of the Treasury to make direct investments in banks, credit unions, and holding companies that are designated as CDFIs or MDIs. CDFIs and MDIs often make smaller loans and work with borrowers who face barriers and may require more time-intensive and personalized technical support. ECIP investments are designed to support mission-motivated institutions to increase responsible investments in low- and moderate-income and minority communities that have disproportionately suffered from the impacts of the pandemic. More than $8.7 billion in investments in 186 community financial institutions is expected to increase lending to small and minority-owned businesses and low- and moderate-income consumers in underserved communities, including rural areas. ECIP investments range from more than $200 million to less than $100,000 and support institutions headquartered in 36 states, the District of Columbia, and Guam. For more information, visit Emergency Capital Investment Program.
The Consolidated Appropriations Act provided $3 billion to the Community Development Financial Institutions Fund (CDFI Fund) to administer and provide emergency support for CDFIs and communities responding to the pandemic through two programs. The CDFI Rapid Response Program was allocated $1.25 billion in COVID-19 pandemic relief funds to help certified CDFIs. Under the program, 863 CDFIs have been awarded grants to respond to economic challenges created by the pandemic in underserved communities.
The awards were made based on a formula using criteria such as certification status, financial and compliance performance, portfolio and balance-sheet strength, diversity of CDFI business model types, and program capacity. The CDFIs may spend the grant funds on eligible activities such as financial products, financial services, loan loss reserves, development services, capital reserves, and certain operational activities as defined by the Notice of Funds Availability. For more information, visit COVID-19 Stimulus Funds: CDFI Rapid Response Program.
An additional $1.75 billion was allocated to the CDFI Fund's Minority Lending Program for grants to CDFIs. The grants are to expand lending, grant making, and financing other activities in low- or moderate-income minority communities and to assist individuals and small businesses with significant unmet capital or financial service needs. The program will provide financial assistance, technical assistance, awards, training, and outreach programs to recipients that are minority lending institutions, a new category of CDFIs.
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Collection: Community Developments Investments
Banks are partnering with community financial institutions and other local organizations to help communities across the nation recover from flooding, fires, other natural disasters, and the COVID-19 pandemic. Stock photos.
Call (202) 649-6420 or email firstname.lastname@example.org. This and previous editions are available on the OCC's website at www.occ.gov/communityaffairs.
Articles by non-OCC authors represent the authors’ own views and not necessarily the views of the OCC.