CDFIs have proven to be the right tool to help small businesses, let’s give them what they need to get the job done.

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The Build Back Better Act that would reach Congress would be a historic investment in our nation’s economy, including significant funding to help our small Main Street businesses grow and prosper. From proposals to lower the cost of health care (a perennial thorn on the side of small business owners), to investments in child care and paid time off that would be a boon to the small business workforce. , at an allocation of $ 1.6 billion for the Minority Business Development Agency, the law takes the needs of small businesses seriously.

Another thing we would like to see is that the federal government continues to invest heavily in Community Development Financial Institutions (CDFIs).

CDFIs are widely credited with escalating throughout the pandemic to effectively help millions of smaller U.S. businesses hang in there. They are ready to broaden their impact in the long term, and as the name suggests, they are community-based. However, due to their relatively small size, they face loan constraints. They need investment capital, operational resources and capacity building from policymakers, philanthropists and advocates to reach the scale they need to have long-term impact.

That is why CAMEO, a leading advocate for one to five employee companies in California, recently relaunched its CDFI incubator build the capacity of existing lenders and train new CDFI staff and administrators. The CDFI incubator includes grant opportunities, access to an online lending platform for low volume lenders, workshops on microcredit, loan underwriting and management, capital and down payment opportunities. networked. In short, it provides the complex technical information needed to successfully run a mission-oriented lending program in the hope that this training will lead to the creation of more CDFIs and strengthen the capacity of existing CDFIs to provide capital whose small business owners need to grow. and thrive. We are ready to do our part and call on others to join us.

The pandemic and the government’s well-meaning response to provide financial assistance have shown how disconnected millions of small business owners are from our traditional financial institutions. For example, PPP, especially its original iteration, has left out vast swathes of businesses. Government Accountability Office audit uncovered loans “traditionally underserved” businesses – including those led by women, veterans, and minority landowners – was disproportionately low throughout the program’s first year. Only 12 percent of Black and Latino owned businesses received all of the funding they needed and over 40 percent of Black-owned businesses closed in the first months of the pandemic compared to 34 percent overall.

After advocacy from organizations like CAMEO and their small business allies across the country, the government reconfigured PPP and the trend improved. One of the main reasons was that officials relied on CDFIs, which provided by surpassing other PPP lenders in many ways and reaching outmoded companies during the first phase of the PPP. Policymakers took note of the success of CDFIs and, in June, the Vice-President Kamala harrisKamala Harris Biden Cannot Allow Domestic Escapes To Transfer To The Global Stage Joe Manchin Should Accept Paid Time Off – Now The Hill’s 12:30 Report: Biden Defends Disappointing Jobs Report MORE announcement $ 1.25 billion in funding CDFIs to support economic aid programs in underserved communities.

But the job is not done. As the economy rebounds, several indicators show that the return to recovery could be eventful. The September jobs report saw the unemployment rate drop, but the United States is not adding as many jobs as many would have hoped. The economy could collapse due to aggravate supply chain bottlenecks Where another variant of Covid-19. According to a recent poll By Alignable, 80% of small businesses are concerned about the impact of the Delta variant.

As federal assistance programs for small businesses come to an end, CDFIs can help an economic recovery that is still trying to find its footing, but they need the means to do so. The federal government has offered $ 360 million in credits for CDFIs in 2022. That’s more than what they’ve received in years past, but these are no ordinary times. The CDFIs have proven their merit and their effectiveness; let’s give them the financial support they need to keep our small businesses and our economy strong. Policymakers gave CDFI $ 1.25 billion to get the job done in June. They are expected to match that again in 2022, whether through the budget process or some other creative solution like a public-private partnership.

In addition, philanthropists can offer low-interest, zero-interest loan capital. And advocates can continue to push for investments in CDFIs and policies that create more inclusive small business lending.

CDFIs have proven their effectiveness during the pandemic in helping small, closed and struggling businesses that had nowhere to turn. Now is the time to support CDFIs, strengthen their networks, organizations and staff so that entrepreneurs and workers can chart the course for an economic recovery that touches every community.

Carolina Martinez is CEO of CAMEO, a Californian network of microenterprises, and an expert on small businesses and CDFIs.


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