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The latest revision of the Paycheck Protection Program appeared to be a victory for the most vulnerable small businesses, offering more generous relief to companies like solo ventures that were eligible for only tiny loans — or none at all. If only they could take advantage of the changes. President Biden announced an abrupt overhaul two weeks ago to funnel more money to very small companies, some of which qualified for loans as small as $1 under the old guidelines. But the Small Business Administration updated its systems only on Friday, and with just three weeks before the program is set to expire, some lenders say there just isn't enough time to adapt to the changes.
New Biden administration rules overhauling the way small business loans are doled out will potentially leave thousands of sole proprietorships and the self-employed on the sidelines, despite the president's pledge to give them better access to pandemic aid. The Small Business Administration quietly decided that the benefits that President Joe Biden promised to "one-person businesses" won't be available to many of those who have already received aid from the program. The agency concedes those businesses were shortchanged under earlier rules — some received as little as $1 because of the way loans were calculated — but says it isn't able to let PPP borrowers increase existing loans. That means the more favorable new rules will only be available to new loan applicants. Dennis Ammann, the CEO of Peoples Bank in Mississippi, said "it seems as though the small businesses who needed the most help are being penalized."
Kathryn Smart was struggling to make ends meet at the start of England's latest lockdown. The 45-year-old usually earns £1,100 a month working at a debt collection agency in Sunderland, but reduced her hours to help home-school her six-year-old son. Smart needed money to tide her family over, but knew she would not qualify for a mainstream loan. A bad experience with payday lenders several years ago left her with £3,000 worth of debt and a poor credit score. With a contentious county court judgment (CCJ) also on her file, she Googled “loans offered to borrowers with CCJs” and found Fair Finance, one of the UK’s 50 community development finance institutions (CDFIs). While the not-for-profit cooperatives have existed in the UK for 20 years, they are little-known outside their customer base. “I first thought they were a payday lender,” says Smart. “I didn’t know they were a responsible finance company until I had done a bit more research.”
In its largest award round to date, the U.S. Treasury Department's Community Development Financial Institutions (CDFI) Fund announced Feb. 22 that more than $175.4 million in Capital Magnet Fund awards (CMF) have been distributed during its sixth funding round. The fiscal year (FY) 2020 award round also saw the largest number of award recipients with 48 organizations receiving funds. The 48 awardees were selected from 137 applications, which requested more than $642.2 million in awards this CMF round. Congratulations to CDBA members Beneficial State Bancorp, Inc., Central Bank of Kansas City, City First Enterprises, Inc., United Bank, and Virginia Community Capital, Inc. on their Capital Magnet Fund awards!
Two CDBA member bankers were featured on NPR's Marketplace program in late February. Robert James II, Director of Strategic Initiatives at Carver State Bank, was on the February 22 program to discuss hiring at black-owned banks and the Paycheck Protection Program rollout. Dominik Mjartan, President and CEO at Optus Bank, was on the February 24 program to discuss small business recovery during the pandemic.
Carver Bancorp, Inc., the holding company for Carver Federal Savings Bank, a certified Minority Depository Institution (MDI) and Community Development Financial Institution (CDFI), announced that JPMorgan Chase has made a long-term equity investment of approximately $6 million in common and preferred shares of the Company. JPMorgan Chase's equity investment represents approximately 3.4 percent of the Company's issued and outstanding common stock at purchase. In addition, the investment includes 5,000 shares of the Company's Series F preferred stock. Carver expects to utilize the majority of the proceeds from JPMorgan Chase's investment to ramp up its lending activities to Minority and Women Business Entrepreneurs and expand its financial education programs in the diverse low-to-moderate income communities it serves.
While people are feeling the ongoing impact of the pandemic, Money/Finances is the No. 1 driver of stress for them, according to the second annual Huntington "Money Mindset" survey, a barometer on financial wellness. "Stress related to money and finances is a clear reflection of the challenges many people are having during these difficult times," said Andy Harmening, Huntington's president of Consumer and Business Banking. "Personal finances are often about planning, and we want to do everything we can to help people better understand where their money is going in an effort to look out for them.
As President Biden continues to select hundreds of key personnel to serve as the new administration, one crucial seat remains open: the next comptroller of the currency. The person who fills this role will have a profound impact on the entire banking industry over the course of their term. But there are two groups of financial institutions that have a particularly large stake in the game — community development financial institutions (CDFIs) and minority depository institutions (MDIs). But to keep this mission ongoing, it will require stronger partnerships between financial institutions and fintechs. The future leader of the Office of the Comptroller of the Currency will also play a critical role in this area since the OCC was the first bank regulator to push forward in recognizing fintechs as a part of the banking world — an effort that was supported by OCC leaders of the previous two administrations.
Fernando Tatís Jr. was 18 years old, just a low-level prospect from the Dominican Republictrying to work his way up in the San Diego Padres farm system, when he made a financialdeal that would impact his entire baseball career. And it wasn't with the Padres. Tatís signed a contract with Big League Advance, an unusual investment fund that paysminor-league players money up front in exchange for a share of their future MLBearnings. Tatís, now 22 and widely viewed as one of the sport's best young stars, today knows whatthose earnings will be. He agreed to a record-setting 14-year contract with the Padres onWednesday night worth an eye-popping $340 million, the third-highest total in MLBhistory. His new contract also creates a significant obligation for Tatís: to pay a sizable chunk ofhis new bounty—perhaps close to $30 million—to Big League Advance.
The Federal Deposit Insurance Corporation (FDIC) today named Sultan Meghji as the agency's first Chief Innovation Officer, charged with leading the FDIC's efforts to promote the adoption of innovative technologies across the financial services sector. Mr. Meghji co-founded Neocova, a financial technology firm providing secure, cloud-native, artificial intelligence-based software for community banks and credit unions. In addition, he worked on an aid mission to help implement digital banking in Kenya, Tanzania, and Uganda, and worked with fintechs and central banks to create peer-to-peer banking solutions for hundreds of thousands of people in underserved areas of Africa and Central Asia.