How Harris Engages With Community Lenders To Help Small Businesses
As President Biden nears his 100th day in office, one of the campaign promises looming during his presidency is to ensure that underserved and low-income communities are at the forefront – guard against any economic recovery.
It was a conversation he had in public and behind closed doors with senior administration officials, especially Vice President Kamala Harris. Funds that could help meet that goal could start coming out in June, according to a Treasury Department official.
“The vice president has focused heavily on American small businesses,” said a senior White House official, emphasizing the role of community lenders.
Community Development Financial Institutions (CDFIs) make up the thousands of community lenders across the country that provide capital to small businesses that have difficulty obtaining loans from large banks. The pandemic has disproportionately hit minority and women-owned businesses, and studies have found business owners of color faced greater challenges in obtaining loanseven when they presented a low credit risk.
Small Business Deputy Administrator for Access to Capital Patrick Kelley in a statement called CDFIs “trusted agents” who “play a critical role in lending to underserved communities.”
“[W]We want to maintain this strong and ongoing partnership under the Biden-Harris administration, ”Kelley said in a statement. “We have worked with CDFIs to redouble our efforts to help eligible borrowers in these communities and ensure small businesses in communities of color and underserved communities have better access to PPP and other COVID emergency assistance programs. -19. “
“This was one of the first questions raised by the vice president after taking the oath of office: the importance of community development financial institutions and minority depository institutions (MDIs),” said the secretary of the treasury. Janet Yellen in a statement to CBS News.
Yellen, observing that the racial wealth gap has remained the same since the 1960s, added: “The Vice President deeply understands that if we are to change this very unfair number – and create an economy that works for everyone – then we have to inject capital. in communities that historically haven’t had access to it so people can buy homes and start small businesses.
When the pandemic struck, only 43% of black business owners received all the paycheck protection program funding they were looking for, the lowest share of any group, according to Federal Reserve research . One in five black businesses that requested a PPP received nothing, a higher proportion than any other group.
In December 2020, Congress passed a second COVID relief bill, which included $ 12 billion in funding for CDFIs and MDIs. This consisted of $ 9 billion in indirect capital investments to financial institutions, with the remaining $ 3 billion providing two pots of grants. The first tranche of $ 1.25 billion for rapid response relief will be disbursed first, and the second tranche of $ 1.75 billion will go to a minority loan program. A Treasury Department official said the quick response money will be distributed no later than the end of June.
Harris, who was still a California senator during this time, signed an early bill from Senator Mark Warner, a Democrat from Virginia, which provided the blueprint for eventual funding for community lenders.
“My two biggest supporters on this were [former Treasury Secretary] Steve Mnuchin and Kamala Harris, ”Warner said in a phone interview with CBS News. “She fully understands the challenges that accompany most black and brown communities. We lost 440,000 black businesses, the majority of which were sole proprietors, and they did not have as much access to P3s because African Americans did not have traditional banking relationships. So she did her due diligence and became a big advocate because then we were trying to take it out of the bill over the summer to get it in. [the COVID-19 Relief Bill]. “
According to officials from the White House and the Treasury Department, the staff of the Vice President and Secretary of the Treasury kept in close contact on this issue and also held two formal meetings to ensure funds would be allocated to communities. who need it most.
The first, a public event in early February, also included attendees from local black chambers of commerce across the country. A second private engagement took place in the West Wing Vice President’s office at the end of March. During this meeting, the two services discussed the implementation of the $ 12 billion allocated by Congress in December.
Alongside the Treasury Department, the Vice-President and her staff also met with various CDFIs.
“We started hearing from this administration during the transition. We were called in by Janet Yellen and Assistant Secretary Wally Adeyemo to let them know – even before they took office – to explain to them what was going on with the current PPP loans, ”said Lisa Mensah, President and CEO of Opportunity Finance Network, a network of over 300 people. CDFI members with nearly $ 27 billion in assets. The vice president’s staff also reached out. “We think part of the promise of this administration is that they took to the ground running with an ear very sensitive to the double burden of rebuilding, but rebuilding in a way that was sensitive to how we were actually going to implement racial healing, ”Mensah said.
As the administration continues to determine how grants and investments will be distributed, Harris is pressuring small businesses to apply.
“The vice-president, for her part, has really focused at this stage on ensuring that the largest and best possible pool of candidates is available, doing her best to be seen as competitive candidates. for those funds, ”a senior White House official said.
Some CDFI officials point out that time is running out. “Of dollars that have already been approved by Congress, those dollars need to flow quickly,” said Brad McConnell, CEO of Allies for Community Business, a non-profit CDFI focused primarily on businesses serving under-represented areas of Canada. Illinois and Indiana. “We’re really encouraged that all signs are that they’re, in fact, going to sink quickly. We just don’t know exactly when exactly yet, but the signs are positive about it. “
Harris also enlisted the help of the private sector to bring wealth and opportunity to underserved communities.
According to a White House official, the vice president had phone calls with Bank of America CEO Brian Moynihan and JPMorgan Chase CEO Jamie Dimon.
A spokesperson for JPMorgan Chase said, “We appreciate the opportunity to continue to engage with the Vice President and her office on PPP lending and the importance of community lending and to discuss best practices.”
Bill Bynum, CEO of Hope Enterprise Corporation, an organization that has invested $ 2.9 billion in rural southern areas, said he too had heard from Harris.
“In my conversations with VP Harris, she has made it very clear that she is looking for ways to ensure that the infrastructure resources that the administration prioritizes address this issue in the most vulnerable communities. , including those like the Mississippi Delta and Alabama Black Belt, ”Bynum says. “We have talked a lot about the ability of CDFIs to mobilize private capital from banks that have not served these regions. But CDFIs are very effective at partnering with big banks, with philanthropy, with corporations, as a way to import investments into places where wealth has been extracted for generations.