WASHINGTON, D.C. – U.S. Senator Kirsten Gillibrand joined a call to create a $2 billion fund for Community Development Financial Institutions (CDFIs) that would automatically provide funding to heavily impacted communities during a natural disaster or economic crisis, including a pandemic. Under the proposed legislation, the CDFI Crisis Fund would be triggered by a national or state-wide crisis and would serve as a complement to the general CDFI Fund to give communities immediate support to recover. Like FEMA’s Disaster Relief Fund, the CDFI Crisis Fund will be refilled as funds are deployed each year. Low-income, rural and other underserved communities, as well as communities of color have been especially hard hit by the multiple coronavirus crises and CDFIs are well positioned to help these communities recover.
“Unfortunately, the economic crisis caused by this pandemic has devastated underserved communities and small businesses that were already struggling to survive. Now these economies are in urgent need of assistance,” said Senator Gillibrand. “Strengthening the CDFI fund and creating the CDFI Crisis Fund will quickly deliver critical funding to low-income, rural and minority communities. I’m proud to support this legislation that will jumpstart local economies and help revive neighborhoods across New York.”
CDFIs offer flexible financial products and services, advising, and other wrap-around services to individual and small business borrowers. Due to their integration into their communities, they are more likely than mainstream financial institutions to provide financial services to underserved communities, which often experience lowered credit scores and increased debt collections, bankruptcies, credit card debt, and mortgage delinquencies and foreclosures when natural disasters occur. In 2019, 75% of CDFI lending went to low-income populations, 20% of total lending went to rural areas, and 19% went to persistent poverty areas.
In addition to calling for the establishment of the CDFI Crisis Fund, Senator Gillibrand has also pushed for an additional $1 billion for the CDFI Fund under the Coronavirus CDFI Funding Act to inject resources and spur economic growth and opportunity in communities throughout New York’s that have been distressed by the pandemic. The CDFI Fund is well established to support small businesses, create jobs, and provide mortgage credit, small business loans, and banking services to those who need it the most.