The Native CDFI Network (NCN) invites your organization to join its letter to Congressional leadership and the U.S. Senate Community Development Finance Caucus. The intent of this letter to Congress is to show support for the Scaling Community Lenders Act of 2023 (S. 1442) and the Community Development Investment Tax Credit Act of 2023 (S. 2963).
The Scaling Community Lenders Act of 2023 (S. 1442) would activate and fund the long-dormant Section 113 of the Riegle Act – the CDFI liquidity enhancement program – which would allow the CDFI Fund to create pilot projects within the industry through a competitive application process that can be used to attract new capital to the industry and increase the velocity of CDFI lending nationwide. The bill redirects $100 million in dividends from the Emergency Capital Investment Program to pilot a liquidity facility at the CDFI Fund. This program is already authorized under the Riegle Act but never received an appropriation of funds.
The Community Development Investment Tax Credit Act of 2023 (S. 2963) would increase CDFIs’ access to sorely needed, long-term, patient capital to CDFIs through the extension of a tax credit to private investors who make equity investments in those CDFIs. Importantly, the bill now features a designation for emerging CDFIs, which are CDFIs in formation. These entities could apply for the tax credit but would not become CDFIs or have access to the dollars generated from the credits until they have completed the fundraising process.
Together, these two bills would dramatically boost investments in CDFIs across the country, in particular Native CDFIs, who contend with considerable unmet capital needs and longstanding challenges in attracting long-term, patient capital as they work to address the financing needs of Native nations, communities, businesses, homeowners, and consumers. The following data points are particularly instructive:
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The unmet capital needs of Native CDFIs for homeownership, small business, and consumer lending are significant and growing: For example, a 2022 NCN survey of 16 Native CDFIs (just one quarter of the country’s 64 Treasury-certified Native CDFIs) found their projected three-year unmet loan capital needs collectively totaled $166 million.
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According to another study, Native CDFI housing lenders had to deny over $40 million in mortgage loans in a recent calendar year due to a lack of lending capital. They anticipate needing at least an additional $94 million per year to satisfy the growing loan demand of the Native communities they serve.
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For FY 2022, funding requests made by applicant Native CDFIs for NACA Base-Financial Assistance (FA) funding exceeded the amount awarded by the CDFI Fund by 49%. Meanwhile, funding requests made by applicant Native CDFIs for NACA Technical Assistance (TA) funding exceeded the amount awarded by the CDFI Fund by 15%.
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According to the Treasury Department, investments made in CDFIs produce an eight-fold return, with each $1 creating $8 in private sector investments.
To formally add your organization as a co-signatory, please click here.
To read the sign-on letter, click here.
Note: Please sign on by Monday, January 29 at 3:00 p.m. Eastern time.