The National Credit Union Foundation (NCUF) said it will grant $50,000 to the Chicago-based National Community Investment Fund (NCIF) to develop a Credit Union Small Business Lending Project.
According to the NCUF, the project would assist CUs in utilizing the $15 billion New Markets Tax Credit (NMTC) program, a federal incentive for investment in low-income communities, intended to accelerate small business, commercial, and participation lending. "Small business lending rates are substantially lower in low-income areas than in upper income census tracts," said NCUF Executive Director Gary Officer.
The NCUF/NCIF said its three goals are: (1) To identify and invest in low-income CUs that offer small business lending; (2) To identify and train low-income CUs that are strong lenders how to add small business lending; and (3) To develop system where low-income CUs can share infrastructure to make small business and commercial loans
The NMTC program provides investors with a tax credit of 39% for their investment over seven years if the investment is placed in a designated Community Development Entity (CDE), which are entities focused on low- income area community development. CUs that qualify as a CDE will have the ability to take in new investments as secondary capital, unsecured loans, or deposits; but would need to quickly disburse "substantially all" of any new investment dollars in business loans.
