WASHINGTON – U.S. Senators Tina Smith (D-MN) and Mike Rounds (R-SD) reintroduced bipartisan legislation to jumpstart economic development and address disparities in access to capital.
The bill would strengthen and expand Community Development Financial Institutions (CDFI), which play a critical role in bringing capital and financial services to a wide range of small businesses, homeowners and housing developers.
Their legislation—the CDFI Bond Guarantee Program Improvement Act will extend authorization of the CDFI Bond Guarantee Program, while making it more reliable and accessible to smaller CDFIs. This legislation will expand and improve a successful program that operates at no cost to taxpayer and allows CDFIs to access long-term, stable funding.
The CDFI Bond Guarantee Program was established in 2010 to provide long-term, low-cost capital to CDFIs, which use the funding for economic development activities in underserved communities. The program’s authorization lapsed in 2014, but it has been extended on a year-by-year basis in annual appropriations bills. Under current program rules, borrowers must have a loan size of at least $100 million – which means that the program can only be used for relatively large projects.
“Unequal access to capital and financial services is a key driver of economic disparity around Minnesota,” said Sen. Smith. “This legislation will jumpstart economic development in these communities by expanding and enhancing a program with a track record of effective capital investment and community development.”
“Since 2010, the Community Development Financial Institutions (CDFI) Bond Guarantee Program has extended long-term, low-cost capital to underserved communities across America,” said Sen. Crapo. “By reducing the minimum dollar amount for each loan, we can enable CDFIs to serve additional, smaller entities and maximize the loan’s impact to transform businesses and communities through market-based investments.”
“Community Development Financial Instructions play a critical role in helping hardworking families achieve the American dream – creating opportunities for Arizonans who otherwise wouldn’t be able to buy a house or start a business,” said Sen. Gallego. “CDFIs need and deserve to know that they will be able to access the capital that makes those dreams possible, and that’s exactly what this bipartisan legislation does.”
“The CDFI Bond Guarantee Program plays a crucial role in maximizing the effectiveness of CDFIs by ensuring underserved communities have access to the financial resources and services they need,” said Sen. Daines. “I’m proud to join my colleagues in introducing this bipartisan legislation to help boost economic development and allow CDFIs to access stable long-term funding, especially in Montana’s rural communities.”
“CDFI’s are crucial to providing financial services and products to underserved communities across the nation. We must continue doing all that we can to invest in them,” said Sen. Blunt Rochester. “I am proud to join with my colleagues to introduce the bipartisan CDFI Bond Guarantee Program Improvement Act, which will increase access to capital for CDFI’s and low-income communities. I look forward to working with my colleagues on both sides of the aisle to pass this legislation through the Senate.”
“CDFI banks and the communities they serve need greater certainty and access to affordable capital to spur more job-creating opportunities in underserved urban and rural areas. This bipartisan measure will make the successful CDFI program stronger and more resourceful,” said Sen. Hyde-Smith.
The CDFI Bond Guarantee Program Improvement Act will authorize the program for four years, to provide certainty to borrowers and lenders. It will also reduce the minimum loan size to $25 million and remove the annual limit on guarantees, to allow smaller CDFI to utilize the program and to support more community development projects. The legislation is cosponsored by Senators Amy Klobuchar (D-MN), Cynthia Lummis (R-WY), Mike Crapo (R-ID), Cory Booker (D-NJ), Tim Sheehy (R-MT), Lisa Blunt Rochester (D-DE), Cindy Hyde-Smith (R-MS), John Hickenlooper (D-CO), Steve Daines (R-MT) and Ruben Gallego (D-AZ).
Full text of the bill can be found here.
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