On May 18, the House Small Business Subcommittee on Economic Growth, Tax, and Capital Access held a hearing entitled, “Examining the Role of Community Development Financial Institutions and Minority Depository Institutions in Small Business Lending.” Two leaders from OFN member CDFIs testified at the hearing: Aissatou Barry-Fall, president and CEO of Lower East Side People’s Federal Credit Union, and Everett Sands, founder and CEO of Lendistry.
In her opening statement, Chair Sharice Davids (D-KS) highlighted the role of CDFIs and MDIs in reaching communities that other lenders neglect and sought feedback on how the Committee could help mission-based lenders support an equitable recovery.
Ranking Member Daniel Mueser (R-PA) noted that CDFIs and MDIs are playing a critical role in the Paycheck Protection Program (PPP) by providing access to capital, offering technical assistance, and responding to the needs of the nation’s smallest firms and organizations.
In her testimony, Barry-Fall highlighted her credit union’s PPP lending and urged the SBA to provide more timely data on remaining funds. She also mentioned the importance of the CDFI Fund in helping grow the organization’s capacity and impact as well as recommended changes to the SBA’s Community Advantage program to allow access for CDFI credit unions.
Sands underscored that the most effective way for Congress and the Federal Reserve to expand capital access for small and underserved businesses is to focus on making significantly more capital available to CDFIs and MDIs. He also recommended the creation of an office within the SBA dedicated to supporting the efforts of CDFIs and MDIs and highlighted the role and potential of technology in improving the capital access landscape for small businesses.
Several Committee members followed Barry-Fall and Sands’s testimony with questions:
- Ranking Member Meuser (R-PA) asked how well CDFIs and MDIs have served underserved communities and businesses through the PPP program, and in particular how the restaurant industry was being served by CDFIs.
- Representative Evans (D-PA) asked about Lendistry’s partnership with the Pennsylvania CDFI network and if that model could be applicable to other states.
- Representative Bourdeaux (D-GA) asked about PPP loan forgiveness for minority-owned businesses and how CDFIs are working with their borrowers to ensure they have the information necessary to apply for loan forgiveness.
- Representative Chu (D-CA) noted that community financial institutions like CDFIs have been instrumental in delivering PPP funds to underserved communities, demonstrating that the Community Advantage model could work at scale by leveraging mission-based lenders to connect small businesses with capital and providing technical assistance.
- Representative Van Duyne (R-TX) asked if CDFIs should be able to receive equity investments as eligible Opportunity Zone businesses and for recommendations for other improvements to Opportunity Zones to help small businesses.
OFN is pleased to see Congress continuing to highlight the work of CDFIs in increasing access to capital for small businesses.
View the full hearing recording.