Community development financial institutions will get nearly $1.25 billion in federal COVID relief funding to help small businesses, Vice President Kamala Harris and Treasury Secretary Janet Yellen announced Tuesday. The money will go to more than 860 of those institutions, many in majority-minority communities, which loan money to low-income and other disadvantaged groups to help promote upward economic mobility.
Harris said the pandemic has accelerated economic inequities in the economy and it must be reimagined.
"Small businesses are of course at the center of this reimagining," Harris said, noting they are critical to the economy in terms of job and wealth creation, as well as keeping the United States competitive. Harris said traditional banks do not always understand the visions of businesses owned by women, people of color or serve low-income areas, but community lenders do.
"Community lenders understand the value in providing access to capital directly to communities. And because they do, they add value to those communities and, by extension, to our entire nation, which is why our administration is making a big investment in community lenders and actively working to increase community lending capacity."
The money is from the new Rapid Recovery Program, passed as part of the December COVID relief legislation and based on a bill by then-Senator Harris along with Senators Mark Warner of Virginia, Cory Booker of New Jersey and Senate Majority Leader Chuck Schumer, as well as Representative Maxine Waters of California. Warner and Waters were both in attendance for today's event.
Through the Rapid Recovery Program, the nearly $1.25 billion will help enable CDFIs to help their customers and communities through the economic hardship caused by the coronavirus pandemic. It is the rapid-response relief part of a larger $12 billion in funding for community and minority financial institutions. Another $9 billion will provide indirect capital investments to financial institutions, while $1.75 billion will go into a minority lending program later in the year.
"This is just the beginning," Yellen said. The Treasury secretary said that every dollar channeled into community lenders prompts $8 in private-sector investments. She also noted that the $12 billion being provided to the community lenders is the most funds that have gone through these institutions since the fund's creation in the 1990s.
"In serving places that the financial sector historically hasn't served well, they lift our whole economy up," Yellen said.
Warner said during his remarks the spending was the government "putting its money where its mouth is" to support minority-owned businesses.
The Rapid Recovery Program award recipients are in 48 states, the District of Columbia, Guam and Puerto Rico and serve urban and rural communities. They also include 58 organizations committed to directing their awards to spending in Native American, Native Alaskan, and Native Hawaiian communities.
Making sure the smallest businesses get the financial support they need to weather the pandemic and recoverfor both the vice president and Treasury secretary and their staffs have been working together to implement the new program. Harris' first event upon taking office was with small business owners. Less than a month into the administration, Harris and Yellen appeared together for an event with local Black chambers of commerce, among other meetings.
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