CUNA wrote to House and Senate appropriations leaders Wednesday requesting emergency legislation to combat the effects of the coronavirus emergency on the ability of small businesses and individuals to access credit and basic financial services during this time of uncertainty.
Specifically, CUNA called for the Community Development Financial Institutions (CDFI) Fund and the Community Development Revolving Loan Fund (CDRLF) to be given an emergency infusion of funds, $300 million and $3 million respectively, separate and apart from fiscal year 2021 funding.
“Both of these funds support generally smaller financial institutions that serve people and small businesses that will likely be the first to feel the real-world effects of a missed paycheck or a cancelled order or contract,” wrote CUNA President/CEO Jim Nussle. “These small businesses and individuals will also likely be the first Americans in this current crisis to need access to emergency credit and other assistance available from their credit unions and other small community financial institutions.”
The CDFI Fund makes capital grants, equity investments and awards for technical assistance to CDFIs for community development initiatives such as small businesses, community facilities, and low-income housing. As of Feb. 18, there are 320 credit union CDFIs, out of 1,127 CDFIs nationwide.
The CDRLF is administrated by NCUA, and assists credit unions serving low-income communities in order to provide financial services and simulate economic activities in their communities.
“The CDFI Fund and the CDRLF are both designed to help the types of community-based financial institutions, like credit unions, that are perfectly positioned to receive this funding the quickest and then turn it around and provide emergency financial assistance to the people and small businesses that need it the most,” Nussle wrote. “Credit unions have a long history of providing low-interest loans and other types of financial assistance to individuals and small businesses during government shutdowns and natural disasters. This emergency funding request is a good investment and is fiscally prudent. Credit unions are often the exact types of community lenders that are perfectly suited to help someone make that mortgage payment or receive that small loan to pay their one or two employees.
“In this and any pandemic or natural disaster, these people are going to be the first hit first and the hardest hit in terms of financial impact. Credit unions, not predatory lenders, should be where these Americans turn for financial assistance,” he added.