U.S. Rep. Carolyn Maloney (D-NY) introduced a bill this week designed to increase loan opportunities for small businesses in developing communities.
The Investing in America’s Small Businesses Act of 2017 would provide grants to Community Development Financial Institutions (CDFIs) to establish loan-loss reserve funds for small business loans under $50,000. This would allow CDFIs to leverage private investments to expand their small business lending programs.
“Small businesses are an integral and essential part of the fabric of our communities,” Maloney said. “In America, we are known for our small businesses and the opportunities available to aspiring individuals who work hard. However, in underserved and developing communities, all too often these small businesses with low-income and minority owners are unable to access the credit they need in order to grow and thrive. CDFIs serve exactly these communities—with great success and economic benefit. Despite this demonstrated success, CDFIs often lack the capital to meet the needs of many promising small businesses, but my bill would provide a solution.”
She said President Trump’s recent budget proposal would cut all grant funding from the CDFI Fund, hurting the poorest inner-city neighborhoods and most distressed rural communities.
“This is not the time to cut funding for CDFIs; it’s a time to expand,” Maloney said. “As small businesses grow, so do the communities they serve. They create stronger workforces and thriving local economies. By passing the Investing in America’s Small Businesses Act and increasing funding for the CDFI Fund, we can help grow small businesses in the neighborhoods in New York City and across the country that need economic development the most.”
Maloney, along with more than 70 members of Congress, sent a letter to the House Appropriations Committee requesting $250 million for the CDFI Fund in FY18, a $17 million increase from last year. The additional capital would allow the CDFI Fund to expand lending to small businesses, she said.
“The CDFI program continues to be extremely relevant for the survival of many small businesses,” Jessica Walker, president and CEO of the Manhattan Chamber of Commerce, said. “The initial funding it provides often serves as a stabilizing factor that better positions an entrepreneur to secure additional funds from other lenders. The federal government should not cut this vital program.”