- Community Development Lenders Get Big Opportunity
FRB of St. Louis
The largest program ever targeted to community development lenders offers them unprecedented opportunities to support small businesses and consumers in under-resourced communities.
Community development financial institutions (CDFIs) have long provided access to capital in under-resourced communities and for people with low incomes. This was especially true in the early days of COVID-19, when CDFIs were credited with making Paycheck Protection Program loans to small businesses that were otherwise overlooked by mainstream financial lenders.
In fact, three CDFIs ranked in the top 10 of all 2021 Paycheck Protection Program lenders by volume. Recognizing the important role CDFIs play in the financial system, the federal government in 2021 appropriated emergency support to them and to minority depository institutions (MDIs) through the Emergency Capital Investment Program (ECIP).
Depositories, such as banks and credit unions, are those financial institutions that obtain their funds mainly through deposits from the public. Under the ECIP, depositories are eligible to receive investment？via loans, grants and forbearance？to support small businesses and consumers, particularly those in under-resourced communities that have been disproportionately impacted by COVID-19. At $9 billion, this is by far the largest program ever targeted to CDFIs.
A total of 186 financial institutions received an ECIP award (PDF) in December 2021, including several based in the St. Louis Fed’s District, the Eighth Federal Reserve District.