Some community development credit union officials said that they rely on the funds provided by the Community Development Financial Institutions Fund (CDFI) to help provide start-up loans to businesses.
However, the Trump Administration has proposed killing the CDFI program as part of its effort to decrease funding for domestic programs in favor of a large boost in defense spending.
“It will be very tragic if, during the next four years, this program goes away,” said Cheryl Fantassi, CEO of Opportunities Credit Union in Winooski, Vt.
Established in the Riegle Community Development and Regulatory Improvement Act of 1994, the CDFIs are designed to encourage private investment, the supply of capital, credit and other development services in economically distressed areas.
The CDFI provides money for financial assistance and technical assistance in areas where there is a shortage of affordable financial services.
In a 2014 report, the Congressional Research Service reported that the financial products include “mortgage financing for low-income and first-time homebuyers and not-for-profit developers, flexible underwriting and risk capital for needed community facilities, technical assistance, and commercial loans and investments to small start-up or expanding businesses in low-income areas.”
Last year, the Obama Administration reported that for the FY2015 funding round, the program received 356 qualified applications asking for more than $435 million in funding.
“The CDFI Fund is uniquely positioned as the federal government entity whose primary mission is to build the capacity of CDFIs to provide loans, investments, business counseling, basic banking services, and financial literacy training to underserved and distressed communities,” the Obama Administration said, at the time.
That’s not the case, the Trump Administration said, in explaining why it favors folding the program.
“The CDFI Fund was created more than 20 years ago to jump-start a now mature industry where private institutions have ready access to the capital needed to extend credit and provide financial services to underserved community,” the Trump Administration said in its budget.
However, the CDFI Coalition, consisting of all types of community development financial institutions, said the cut would hurt those areas that the administration has promised to help.
Check out the full story coming out in the March 29 issue of CUTimes.
