Andrew Harnik/AP Photo
- The Treasury Department invested $9 billion in a program to invest in low-income and minority communities.
- The program would direct funds toward institutions that lend to low-income communities.
- This new funding is part of Biden’s efforts to ensure equitable distribution of COVID-19 financial relief.
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To help the people who have struggled the most during COVID-19, the US Treasury Department announced a $9 billion investment on Thursday in programs to support low-income and minority communities.
The Treasury Department opened applications for the Emergency Capital Investment Program, which, according to a press release, is designed to help communities traditionally excluded from the financial system gain access to COVID-19 relief. To do so, the Program will invest $9 billion in Community Development Financial Institutions (CDFI) and minority depository institutions (MDI) to support the provision of grants and loans in low-income and minority areas.
“America has always had financial services deserts, places where it’s very difficult for people to get their hands on capital so they can, for example, start a business. But the pandemic has made these deserts even more inhospitable,” Treasury Secretary Janet Yellen said in a statement. “The Emergency Capital Investment Program will help these places that the financial sector hasn’t typically served well. It will allow people to access capital, especially in communities of color and rural areas.”
According to the press release, the ECIP will set aside $2 billion for those with less than $500 million in assets, and an additional $2 billion for those with less than $2 billion in assets.
The Program also includes:
- Incentivized lending with no dividends or interest payable or accruing during the first 24 months;
- Maximized Program effectiveness by ensuring stock investments under the ECIP qualify for beneficial capital treatment;
- And tools to strengthen CDFIs and MDIs for the long-term.
The $900 billion stimulus package which Congress passed in December included $12 billion for CDFIs and MDIs, and the $9 billion allocated on Thursday is part of that funding.
Along with the ECIP, the press release said two other complementary programs are being implemented: the CDFI Rapid Response Program, which allocated $1.25 billion for CDFIs to respond to the pandemic's economic impact, and the Emergency Support and Minority Lending Program, which allocated $1.75 billion to expand lending in low-income, minority communities.
The CDFI Rapid Response Program opened on February 25.
This new funding is part of President Joe Biden's efforts to ensure equity in aid distribution during COVID-19. On February 22, he announced changes to the Paycheck Protection Program to ensure those who had previously been left out of it could receive aid, and the president's American Rescue Plan includes funding for underserved communities in the forms of small business aid, housing aid, and more.
"Taken together, these three programs, created under the Consolidated Appropriations Act, 2021, enable Treasury to take aggressive action to address the impacts of the ongoing COVID-19 pandemic, and to promote an equitable economic recovery," the press release said. "These historic investments are intended to provide catalytic growth for institutions and communities that have traditionally been underserved by the financial sector."