The U.S. Department of the Treasury today awarded $1.25 billion in COVID-19 relief funds to 863 community development financial institutions (CDFIs). The awards were announced today by Vice President Kamala Harris at the White House with Treasury Secretary Janet L. Yellen. The grants will be made through Treasury’s CDFI Rapid Response Program (CDFI RRP) and will provide necessary capital for CDFIs to respond to economic challenges created by the COVID-19 pandemic, particularly in underserved communities.
Pacific Community Ventures received the maximum $1.8 million, which we’ll invest in our work delivering reparative capital to economically distressed communities, and communities of color hit hardest by COVID. This builds on our work in 2020. When COVID hit, demand for our capital grew almost 10,000%. We received 1,945 loan inquiries totaling $172 million. While many investors pulled back and stopped lending entirely in 2020, PCV kept our lending open without interruption, and rapidly responded to our clients by refinancing their loans, providing payment deferments and interest-only payment periods, and helping them plan ahead for extended shutdowns and necessary business pivots.
PCV has also gone big in our response by co-founding the $150 million California Rebuilding Fund, which leverages private money with state guarantees to fuel the recovery. And we’ve worked with the California IBank for a faster auto-approval process that guarantees 95% of each loan we make under $100K, the range we see most requested by our community. We’ve also partnered with the state of California and Lendistry on administering the $2.5 billion California Relief Fund grant program, and with Wurwand Foundation on their FOUND/LA Small Business Recovery Fund.
In 2020, PCV funded $4.8M in loans (averaging $70K), with 81% of capital invested in businesses based in, or hiring from, economically distressed communities in California, and 41% of capital invested in businesses based in majority-BIPOC communities in California. 84% of capital deployed went to women or entrepreneurs of color, and PCV’s lending clients each averaged 31% job growth in 2020.
“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,” said Secretary Janet Yellen. “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 CDFI RRP grant funds will be used to support eligible activities such as financial products, financial services, development services, and certain operational activities, and to 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. The CDFI RRP was authorized by the Consolidated Appropriations Act, 2021 (Pub. L. 116-260).
“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,” said CDFI Fund Director Jodie Harris. “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.”