Van Hollen, Menendez Introduce $1B Bill to Spur Economic Activity in Communities Hit Hard by COVID-19
U.S. Senators Chris Van Hollen (D-Md.) and Bob Menendez (D-N.J.) have introduced legislation that would provide an additional $1 billion to the Community Development Financial Institutions (CDFI) Fund to boost local economies in low-income, rural and urban communities that were disproportionally affected by the COVID-19 pandemic.
“CDFIs serve as a direct financial lifeline for struggling communities that have been hardest hit by COVID-19, funding small businesses, non-profits, and a diverse range of community development projects,” said Senator Van Hollen. “The ongoing economic crisis has devastated many of our local economies, and boosting this resource will be crucial to ensuring a full recovery for these communities.”
“The COVID-19 pandemic has taken a sledgehammer to our nation’s economy and our disadvantaged rural and urban communities need our help now more than ever,” said Senator Menendez. “CDFI investments have proven successful in leveraging billions more in private sector investments in low-income communities often challenged by high unemployment, abandoned properties and stagnant incomes to spur economic activity and job creation, grow small businesses and revitalize neighborhoods. The Coronavirus CDFI Funding Act will boost the CDFI Fund and give our communities hit hard by the pandemic a real shot at economic recovery and prosperity.”
The CDFI Fund generates economic growth and opportunity in some of our nation’s most distressed communities by offering innovative programs that invest federal dollars alongside private sector capital. Private community partners have for the better part of a century injected capital, created jobs, and provided mortgage credit, small business loans, and banking services to spur economic growth in lower-income, distressed communities.
Due to the pandemic, many businesses have been forced to close or reduce capacity in order to comply with stay-at-home and social distancing orders. These mom-and-pop shops often drive the local economy. The Coronavirus CDFI Funding Act will inject much needed funding back into communities that need it most.
In 2019, CDFIs made over 772,000 loans or investments totaling nearly $21.5 billion, including loans to over 23,000 small businesses. The average size of each loan or investment was $28,000. CDFIs also financed 51,359 affordable housing units, made 697,854 consumer loans totaling more than $9 billion, and provided 42,006 home improvement and home purchase loans totaling over $4.4 billion. Additionally, CDFIs’ leverage $12 in private capital for every dollar in federal support.
Senators Dick Durbin (D-Ill.), Joe Manchin (D-W.Va.), Elizabeth Warren (D-Mass.), Ron Wyden (D-Ore.), Amy Klobuchar (D-Minn.), Mazie Hirono (D-Hawaii.), Brian Schatz (D-Hawaii), Kirsten Gillibrand (D-N.Y.), and Ed Markey (D-Mass.) are cosponsoring the legislation.
Congresswoman Alma Adams (D-N.C.-12) introduced companion legislation in May.
The full bill text is available here.