WASHINGTON – May 28, the U.S. Small Business Administration, in consultation with the U.S. Treasury Department, announced that it is setting aside $10 billion of Round 2 funding for the Paycheck Protection Program (PPP) to be lent exclusively by Community Development Financial Institutions (CDFIs).
“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.” – Treasury Secretary Steven T. Mnuchin
What’s a CDFI?
Community development financial institutions (CDFIs) are private financial institutions that are 100% dedicated to delivering responsible, affordable lending to help low-income, low-wealth, and other disadvantaged people and communities.
There are 4 types of CDFI lenders:
1. Community Development Banks
Community development banks provide capital to rebuild economically distressed communities through targeted lending and investing. They are for-profit corporations with community representation on their boards of directors. Depending on their individual charter, such banks are regulated by some combination of the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve, the Office of the Comptroller of the Currency, the Office of Thrift Supervision, and state banking agencies. Their deposits are insured by FDIC.
2. Credit Unions
Community development credit unions (CDCUs) promote ownership of assets and savings and provide affordable credit and retail financial services to low-income people, often with special outreach to minority communities. They are nonprofit financial cooperatives owned by their members. Credit unions are regulated by the National Credit Union Administration (NCUA), an independent federal agency, by state agencies, or both. In most institutions, deposits are also insured by NCUA.
3. Loan Funds
Community development loan funds (CDLFs) provide financing and development services to businesses, organizations, and individuals in low-income communities. There are four main types of loan funds: microenterprise, small business, housing, and community service organizations. Each is defined by the client served, though many loan funds serve more than one type of client in a single institution. CDLFs tend to be nonprofit and governed by boards of directors with community representation.
4. Venture Capital Funds
Community development venture capital (CDVC) funds provide equity and debt-with-equity-features for small and medium-sized businesses in distressed communities. They can be either for-profit or nonprofit and include community representation.
Find Out If You Qualify For a Loan
Find a CDFI currently active in the Paycheck Protection Program in your state.
About the Paycheck Protection Program
The Paycheck Protection Program was created by the Coronavirus, Aid, Relief, and Economic Security Act (CARES Act) and provides forgivable loans to small businesses affected by the COVID-19 pandemic to keep their employees on the payroll. To date, more than 4.4 million loans have been approved for over $510 billion for small businesses across America.
Opportunity Finance Network – Phone: 202.618.6100 – [email protected]
Find a CDFI lender in your state
Coronavirus Emergency Funding – How To Apply