From the moment he took office, President Obama has worked to move our economy forward and invest in communities and small businesses so they can do what they do best—expand opportunity, develop new ideas, and create new jobs. At the Department of the Treasury, the Small Business Lending Fund (SBLF), the State Small Business Credit Initiative (SSBCI), and the Community Development Financial Institutions Fund (CDFI Fund) work together to power local growth, create a more inclusive economy and drive America’s recovery. As the year draws to a close, below are some highlights from our work in 2013.
This year marked another successful year for Treasury’s CDFI Fund, during which it utilized its existing award programs to strengthen community development organizations working to revitalize low-income communities, while beginning a new program, the CDFI Bond Guarantee Program. The CDFI Fund was established by Congress in 1994 to promote economic revitalization and community development through investment in and assistance to mission-driven lenders known as community development financial institutions (CDFIs).
The CDFI Fund’s flagship CDFI Program awarded 191 organizations Financial Assistance (FA) and Technical Assistance (TA) awards totaling over $172 million in fiscal year (FY) 2013. The FA awardees are working to increase lending and diversify their product offerings in their target markets, while the TA awardees are using their awards to increase internal capacity to better serve their communities. Included in this round were awards to 10 organizations totaling more than $22 million through the Healthy Food Financing Initiative, which awardees will use to expand their lending to healthy food investments to combat food deserts. In FY 2013, the CDFI Fund also awarded $12.4 million through the Native American CDFI Assistance Program to CDFIs serving Native communities and $17 million in Bank Enterprise Awards to 85 FDIC-insured depository institutions for serving economically distressed communities across the nation.
In April, the CDFI Fund and Treasury announced the tenth round of the New Markets Tax Credit (NMTC) Program, awarding $3.5 billion in NMTC allocation authority to 85 community development entities. Since its creation in 2000, the NMTC Program has played a unique and vital role in attracting private capital to America’s distressed communities, supporting a wide range of business and community investments. Through 2012, the NMTC Program has created or retained an estimated 561,800 jobs, supported the construction of 22 million square feet of manufacturing space, 71.9 million square feet of office space and 55.3 million square feet of retail space.
Finally, the CDFI Fund hit a major milestone in the implementation of the new CDFI Bond Guarantee Program by approving the first three term-sheets for $325 million in bonds for investments in low-income and distressed communities across the nation. Created by the Small Business Jobs Act of 2010, the CDFI Bond Guarantee Program has the potential to transform the lending capabilities of the CDFI industry by widening CDFI access to capital markets.
2013 was a breakthrough year for Treasury’s SSBCI program. The program was created by the Small Business Jobs Act to award almost $1.5 billion to state-administered programs that support small businesses and small manufacturers. The program is expected to help spur $15 billion in new private sector lending or investment by leveraging $10 of private capital for every dollar of federal support.
This year saw SSBCI publish its first annual report, which showed that the program had already supported 4,600 loans and investments totaling $1.9 billion by the end of 2012. The report analyzed the performance of the basic types of SSBCI programs and featured businesses that have been able to expand and hire because of the program, including auto supplier New Center Stamping in Detroit, Michigan and M. Luis Construction, which Secretary Lew visited during National Small Business Week, in Rockville and Baltimore, Maryland (photo below).
The most recent SSBCI Quarterly Report, which tracked performance through the end of the third quarter, was released earlier this week and shows that states used over $677 million to support small businesses. The majority of states have accelerated their expenditure, obligation or transfer of SSBCI funds, more than doubling the amount of funds reaching local, growing companies since the beginning of this year.
The SBLF was created by the Small Business Jobs Act as a dedicated fund designed to provide capital to qualified community banks to encourage small business lending. This year, SBLF participants surpassed an important milestone: they have now boosted aggregate lending to small businesses by more than $10 billion over the program’s baseline level.
Increases in small business lending have been widespread across SBLF participants, with 92 percent of participants having increased their small business lending and 86 percent having increased by 10 percent or more. Additionally, SBLF banks have increased business loans outstanding by a median of 48 percent over baseline levels, versus a 10 percent median increase for the representative peer group.
This year saw the release of SBLF’s First Annual Lending Survey, providing data that allows Treasury to estimate the number of loans generated by SBLF participants’ increased lending. By the second quarter of 2013, that number stood at 48,600 new loans, spread across all regions of the country and a mix of industries, with service, agricultural and retail sector businesses leading the way. Going into 2014, SBLF continues to be a source of capital that’s allowing Main Street banks to lend to more Main Street businesses.
To learn more about Treasury’s small business and community development programs, and the potential they hold for 2014, please visit the links below:
The Community Development Financial Institutions Fund
o Brochure and Factsheets
o The CDFI Program
o The New Markets Tax Credit Program
o The CDFI Bond Guarantee Program
o The Native American CDFI Assistance Program
o The Bank Enterprise Award Program
The State Small Business Credit Initiative
The Small Business Lending Fund
Matt Bevens is a Media Affairs Specialist at the U.S. Department of the Treasury