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$12 billion in loans soon to be available in disadvantaged areas hit by COVID-19

By David Pendered

Some consumers and businesses in minority and low-income communities will soon be able to borrow money that previously wasn’t available to lenders to provide to borrowers.

disadvantaged neighborhoods

Consumers and businesses in disadvantaged neighborhoods will have access to $12 billion set aside to provide loans in these areas in the appropriations act approved by Congress in December 2020. Credit: David Pendered

The program calls for financial institutions to apply to the federal government for the money they will lend. Institutions that receive funding from the new $12 billion program are to lend the money on favorable terms to low-income and minority consumers and businesses.

The date the money will be available at a local bank hasn’t been determined. But the program has been fast-tracked by regulators who allowed it to accept applications while public comments on the program are still being accepted, according to a statement from the Federal Reserve. The money is targeted specifically to:

  • “[P]rovide loans, grants, and forbearance to small businesses, minority-owned businesses, and consumers, especially in low-income and underserved communities, which may be disproportionately affected by COVID-19.”

A total of $12 billion is available, nationwide. Congress provided the money in the appropriations act signed into law on Dec. 27, 2020 by then President Trump.

Treasury Secretary Janet Yellen added her support to the program on March 4, the day the government announced it was opening the application process for the Emergency Capital Investment Program.

Yellen said in a statement:

  • “America has always had financial services deserts, places where it’s very difficult for people to get their hands on capital so they can, for example, start a business. But the pandemic has made these deserts even more inhospitable.
  • “The Emergency Capital Investment Program will help these places that the financial sector hasn’t typically served well. It will allow people to access capital, especially in communities of color and rural areas.”

The program is intended end the troubles that would-be borrowers faced when trying to access money through the CARES Act of 2020. A congressional committee determined that some of the nation’s larger lenders had not made funds available to small, struggling businesses, while they had provided money to larger businesses, according to a report from the House Select Committee on the Coronavirus Crisis, issued in October 2020.

Maxine Waters

Maxine Waters

In response, U.S. Rep. Maxine Waters (D-Ca.), chair of the House Committee on Financial Services, said in a statement she backed the program now funded with $12 billion:

  • “After big banks funneled Paycheck Protection Program funds to their large business clients in the first round of the program, I fought to ensure that [minority depository institutions] and [Community Development Financial Institutions] had a meaningful opportunity to participate and provide funds to low- and moderate-income communities and communities of color, which have been hit the hardest by the pandemic and its economic impacts.
  • “The $12 billion in funding in this bill will allow CDFIs and MDIs to continue to support those communities and help them to recover from this crisis.”

The $12 billion program has three components:

  • $9 billion – to provide “financial products for small and minority-owned businesses and consumers in low-income and underserved communities.”
  • $1.25 billion – to provide a “program for depository and non-depository CDFIs intended to support, prepare for, and respond to the economic impact of the coronavirus crisis.”
  • $1.75 billion – to “expand lending, grant making, or investment activity in [low- and moderate income] minorities communities and to minorities that have significant unmet capital or financial services needs.”


David Pendered

David Pendered, Managing Editor, is an Atlanta journalist with more than 30 years experience reporting on the region’s urban affairs, from Atlanta City Hall to the state Capitol. Since 2008, he has written for print and digital publications, and advised on media and governmental affairs. Previously, he spent more than 26 years with The Atlanta Journal-Constitution and won awards for his coverage of schools and urban development. David graduated from North Carolina State University and was a Western Knight Center Fellow.


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