Community Development Financial Institutions funding in HEROES Act is key to helping economic fallout
Last month, the House passed legislation to provide critical funding to help state and local governments, support our front-line workers in the fight against coronavirus and assist small businesses and workers impacted by the pandemic. However, our work is far from over; we will be dealing with the economic fallout for months, if not years to come.
That’s why the $1 billion in the HEROES Act for Community Development Financial Institutions (CDFIs) is key. This funding will not only provide much needed access to capital for struggling rural and urban communities at present, but it will help us lay the path toward economic revitalization in the uncertain times ahead. In addition, it will allow CDFIs to stay afloat while continuing to finance Paycheck Protection Program (PPP) loans.
CDFIs have a long and successful history providing financial services in urban neighborhoods and rural areas underserved by traditional financial institutions, particularly those with high rates of poverty and unemployment. Thousands of CDFIs across the country are working right now on the front lines of the economic crisis, triaging distressed businesses, helping families avoid foreclosure or eviction through credit and housing counseling, and working to help stabilize struggling economies.
As the chair of the Appropriations Subcommittee on Financial Services and General Government, the committee with funding jurisdiction over the CDFI Fund at Treasury, I’ve fought to see increases for this critical funding for low-income communities and people. CDFIs, which are mission-driven lenders, leverage an additional $12 for every dollar in federal resources, which makes our investment a smart one with a huge return for low-income rural and urban communities and people.
In the most recent Fiscal Year, FY 2019, CDFI Fund Program award recipients made 772,348 loans to small businesses, micro-enterprises, and consumers totaling $21.5 billion. Some of CDFI financed projects include food banks and initiatives to improve access to healthy food, health centers and hospitals, affordable housing, shelters, treatment centers and other businesses on the front lines, helping their communities deal with the hardships brought about by the coronavirus.
This week, the CDFI community is holding a week of action to bring attention to the work and services CDFIs provide in their communities. As I read these stories about the restaurants and grocery stores they are helping adapt to keep their doors open, the health care centers they are assisting in areas with limited infrastructure, the small businesses and local governments they are working with in my own state, I am inspired and hopeful about our ability to rise up to the incredible challenges we face.
Currently, there are 1,131 CDFIs with a collective total of $211 billion in total assets and total outstanding portfolios of $158.7 billion. The $1 billion request represents only 0.47 percent of total CDFI industry assets.
I implore the Senate to move swiftly to approve the HEROES Act, including the $1 billion in CDFI Fund appropriations, so CDFIs can quickly get the money out the door and into the communities where it is needed most.
Quigley represents the 5th District of Illinois and is chairman of the Appropriations Subcommittee on Financial Services and General Government.
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