U.S. Sen. Mark R. Warner (D-VA) recently announced that minority-owned and community-based lending institutions can now apply for grants through the U.S. Treasury Department to support, prepare for, and respond to the economic impacts of the COVID-19 pandemic. The funding is available as part of a record $12 billion investment to open up new credit opportunities for Black, Latino and low-income communities that Sen. Warner successfully fought to include in the $900 billion COVID-19 relief bill Congress passed in December.
“Even before the pandemic, low-income communities and communities of color faced significant barriers in accessing credit and economic opportunity,” said Sen. Warner. “The economic crisis caused by COVID-19 has only exacerbated those inequalities. This announcement by the Treasury Department is one step in helping low-income and minority communities recover and emerge from this unprecedented economic downturn with more opportunities than before.”
Surveys show that Black- and Latino-owned small businesses have been particularly hard-hit during the pandemic. Thousands of minority-owned small businesses have closed for good, in part due to difficulty securing bank loans and accessing assistance such as the Paycheck Protection Program. The Federal Reserve Bank of New York found that while overall small business ownership in the U.S. dropped 22 percent between February and April 2020, Black and Latino ownership dropped by 41 percent and 32 percent, respectively. Another recent survey revealed that almost 1 in 5 Black and Hispanic entrepreneurs expect to permanently close their doors within three months, compared to 14 percent of white small business owners.
In order to combat the hemorrhaging of jobs and economic opportunities during the pandemic, Sen. Warner in July teamed up with then-Sen. Kamala Harris (D-CA), Sen. Cory Booker (D-NJ) and a bipartisan group of colleagues to introduce the Jobs and Neighborhood Investment Act in order to strengthen the financial institutions that serve communities of color and increase lending to minority-owned businesses and lower-income borrowers. The effort secured endorsements from the Black Economic Alliance, the NAACP, the National Bankers Association, the National Urban League, the Center for Responsible Lending and a host of other advocacy organizations and civil rights groups. Sen. Warner was later able to secure provisions from the bill in the Coronavirus Response and Relief Supplemental Appropriations Act of 2021, which was signed into law on December 27, 2020, providing an unprecedented $12 billion in funding for lenders that predominantly operate in underserved communities.
This announcement by the Treasury Department released an initial tranche of $1.25 billion in grant funding for eligible community development financial institutions (CDFIs) in order to expand the flow of credit into underserved, minority, and historically disadvantaged communities, helping small businesses stay afloat and expand operations while providing affordable access to credit for lower income borrowers. Additional funding will be made available in the coming months, as part of the largest single investment into minority-owned and community-based lending institutions in the nation’s history.
- Submitted by Rachel Cohen, Communications Director
