The U.S. Department of the Treasury awarded Tuesday COVID-19 relief funds to 863 community development financial institutions (CDFIs) this week.
The awards, made through the Treasury’s CDFI Rapid Response Program (CDFI RRP), total $1.25 billion. The funding will provide the necessary capital for CDFIs to respond to economic challenges created by the COVID-19 pandemic, particularly in underserved communities.
“In serving places that the financial sector historically hasn’t served well, CDFIs lift our whole economy up. We know that for every dollar injected into a CDFI, it catalyzes eight more dollars in private-sector investment, meaning that today’s announcement might lead to an additional $10 billion in investment,” Treasury Secretary Janet Yellen said. “The President and the Vice President ran on a very ambitious agenda – ‘Build Back Better,’ unwinding systemic racism, creating an economy that works for everyone. I believe this is what that looks like in practice. By channeling more capital into CDFIs, we are translating those ideals into reality.”
The grant funds will be used to support eligible activities such as financial products, financial services, development services, and certain operational activities. They will also enable CDFIs to build capital reserves and loan-loss reserves. The CDFI Fund designed the program to disburse the funds rapidly in light of the nationwide economic impacts of the COVID-19 pandemic.
“These awards provide CDFIs with an unprecedented level of flexible capital to help distressed and underserved communities across the country take meaningful steps towards recovering from the debilitating economic impacts of the COVID-19 pandemic,” CDFI Fund Director Jodie Harris said. “CDFI RRP awards will enable CDFIs to help businesses keep their doors open, help families make ends meet, and help maintain important community facilities during this difficult time.”
The award recipients come from 48 different states, as well as the District of Columbia, Guam, and Puerto Rico.