The Small Business Administration has set aside $10 billion in Paycheck Protection Program funds for community development financial institutions.
The SBA and the Treasury Department said in a press release that the funds will ensure that PPP loans reach low-income communities.
“The forgivable loan program ... is dedicated to providing emergency capital to sustain our nation’s small businesses, the drivers of our economy, and retain their employees,” SBA Administrator Jovita Carranza said. “CDFIs provide critically important capital and technical assistance to small businesses from rural, minority and other underserved communities, especially during this economically challenging time.”
“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 Mnuchin said.
The $10 billion includes $3.2 billion in funds that CDFIs had already approved during the program's second round. Overall, CDFIs have approved roughly $7 billion in PPP loans.
Inclusiv, a trade group representing community development credit unions, praised the move in a statement Thursday but suggested further improvements still need to be made, including rectifying the fact that minority depository institutions have not received PPP allocations of their own. The group said in plans to continue pushing Congress for a variety of fixes to the program, including streamlining loan forgiveness for small businesses, expanding the program beyond an emphasis on paychecks, and ensuring that any funds returned by businesses that should not have qualified are then earmarked specifically for CDFIs and MDIs.
According to government data, 324 credit unions currently have CDFI certification, representing a little more than 5% of the total industry. The Natinal Credit Union Administration has taken steps to help increase the number of institutions certified as CDCUs, inlcuding streamlining the application process. The current deadline for applications ends May 31.
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Aaron Passman contributed to this report.
