CDFIs

Community development financial institutions and minority-owned banks have long faced funding challenges, but billions of dollars of investment — spurred by Black Lives Matter protests — have given them an opportunity to increase lending by a factor of 10. Here’s how they can do it.

It may seem odd that Citigroup has created an online lending platform that matches small businesses with minority-run and other banks for no financial benefit. Yet company executives and observers say it makes sense.

Ando, a challenger bank focused on sustainability, is helping Virginia Community Capital Bank expand its 5-year-old clean energy lending program by finding a bigger pool of depositors who are eager to fund solar loans.

Community development financial institutions could do more lending in low-income neighborhoods if policymakers relaxed accounting rules, increased government support and encouraged more investment from hedge funds and other nonbank lenders.

The Minneapolis company recently advised a nonprofit on a $30 million issuance that will provide financing to developers building multifamily housing and community facilities. It includes a framework, which the bank intends to deploy again, for informing investors on how the money is being used.

Native American reservations have some of the country's highest concentrations of unbanked households. But tribes are finding ways to get their members access to capital — with or without banks.

The Treasury Department is awarding $1.25 billion to 863 community development financial institutions through the Rapid Response Program, which allows banks and credit unions to earmark funds for mortgages and business loans in underserved markets.

The Biden administration will award $1.25 billion to hundreds of community lenders in an effort to speed the economic recovery from the coronavirus pandemic, Vice President Kamala Harris will announce on Tuesday.

The funding requests break sharply with the Trump administration's calls to eliminate key housing funds and backing for community development financial institutions. The White House also wants to substantially increase the budgets of the Treasury Department and the Small Business Administration.

The U.S. unit of Toronto-Dominion Bank plans to invest in CDFIs and specialized funds that serve Black, Hispanic and other diverse business owners in its East Coast territory.