- SBA announces that community financial development institutions will be first in line when new Paycheck Protection Program applications are considered
- CDFIs will receive priority for at least the first two days after the application portal reopens
- SBA overseeing a number of other efforts to encourage loans to underserved communities
Paycheck Protection Program applications issued through community financial development institutions will be first in line when the loan portal opens, the U.S. Small Business Administration has announced.
In a three-page document entitled “Guidance on Accessing Capital for Minority, Underserved, Veteran and Women-Owned Business Concerns,” the SBA says it will exclusively accept PPP applications from CDFIs for at least the first two days after the portal reopens. It is also planning Direct Lender Match borrower inquiries to small lenders who traditionally aid underserved communities, intending to match small businesses with microlenders, small asset lenders, Certified Development Companies, and Farm Credit System lenders.
CDFIs are administered by certain banks to provide targeted investments designed to spur economic growth in low-income, low-wealth, and other underserved communities. The institutions offer affordable lending options as well as other services such as technical assistance.
The announcement comes on the heels of an Associated Press analysis which determined that minority-owned businesses were often delayed for several months in receiving PPP funds under the first round of loans. The analysis found that these businesses often encountered challenges such as a lack of response or outright rejection from lenders.
The SBA notes how the $900 billion economic stimulus package that revives the PPP includes several set-asides, including $15 billion for CDFIs, $15 billion for PPP loans through insured depository institutions, credit unions, and Farm Credit System institutions with consolidated assets of less than $10 billion; $35 billion for first draw PPP loans; and $15 billion for first draw and $25 billion for second draw loans for companies with 10 employees or less or loans under $250K in low or moderate income neighborhoods.
The SBA is pledging to continue a number of ongoing efforts including setting aside time to assist small lenders with processing PPP loans, expanding the lending capacity of small lenders by pledging loans to the Federal Reserve as collateral, and working to promote awareness of its initiatives through marketing efforts, field offices, and government partners. It is also encouraging CDFIs and lenders owned by minorities, women, veterans, or military personnel to offer PPP loans.
