Mission-driven Community Development Financial Institution (CDFIs) and Minority Depository Institutions (MDIs) have transformative potential, HOPE CEO Bill Bynum told members of the House Financial Services Committee Wednesday. Bynum testified for a hearing on CDFIs and MDIs, and CUNA also submitted a letter for the hearing’s record.
HOPE consists of Hope Credit Union, Hope Enterprise Corporation, and the Hope Policy Institute.
“In normal times, and more so during times of crisis, HOPE has been guided by a simple premise: when afforded opportunity and access to the right tools, people can climb the economic ladder,” Bynum said. “Mission-focused CDFIs and MDIs, like HOPE, are on the frontlines providing vital tools and opportunities to people and communities far too often neglected.”
Bynum noted that—of Hope’s 35,000 credit union members—69% have household incomes below $45,000 and eight out of 10 are people of color.
He also said that Hope served as a leader in organizing CDFIs, MDIs, and others to successfully advocate for modifying the Paycheck Protection Program to ensure additional funds for community lenders.
Hope made 5,216 PPP loans, 89% to borrowers of color and 50% to women. The average amount of these loans was $26,814, over $40,000 less than the program average nationwide.
Of Hope’s $140 million in PPP lending, 98% of the loans were for amounts of less than $150,000, and more than 3,500 loans were to sole proprietorships (96% of Black owned businesses in the Deep South are sole proprietors).
CUNA highlighted how MDIs and CDFIs help serve their communities and called on Congress to help increase financial inclusion.
“Under current law, only multiple common bond credit unions are eligible to add underserved areas to their field of membership. In addition, credit unions are also arbitrarily restricted in the amount of business lending that they can provide to 12.25% of assets,” the letter reads. “Lifting that cap would ensure small businesses would be able to access the capital they need.
"CUNA strongly supports the Expanding Financial Access for Underserved Communities Act, which would allow all federal credit unions to add underserved areas to their field of membership and exempt business loans made by credit unions in low-income areas from the credit union member business lending cap,” It adds. “Furthermore, the legislation expands the definition of a low-income credit union to include any area that is more than 10 miles from the nearest branch of a financial institution.”