On November 6, 2017 the US House of Representatives Ways and Means Committee began the markup of the Tax Cuts and Jobs Act of 2017. If passed, this legislation as currently drafted would effectively eliminate the New Markets Tax Credit (NMTC) Program, which has been widely recognized as one of the most effective Federal programs to create jobs and promote small business in distressed rural and urban communities. The NMTC Program works to break the cycle of disinvestment in low-income communities by attracting the private investment necessary to reinvigorate struggling local economies. For every $1 of federal funding, the Program generates $8 of private investment.
The gridlock in Congress has challenged legislators to pass any meaningful bills on banking regulations, though bankers recently scored a victory when the Senate voted to repeal the Consumer Financial Protection Bureau's arbitration rule. Still, banks are concerned about other proposals, such as the CFPB's plan to collect data on small-business lending and changes to the Home Mortgage Disclosure Act. These worries only seem to compound an increase in nonbank competition and cybersecurity threats.
There are $92 trillion in bond markets around the world. Corporations have ready access to those dollars. For example, when Amazon needed $16 billion to acquire Whole Foods, it borrowed it through the bond market. Now, nonprofit lenders in the U.S. with a mission to make capital meet the needs of poor communities have a foothold into that world.
Philadelphia's only black-owned bank, United Bank of Philadelphia, is celebrating 25 years of serving its community. Evelyn Smalls, President and CEO, said, "Our fundamental goal is to see businesses grow and succeed. A lot of businesses do start in this region, but I think there is still a fair number of them that don't survive over three to five years. So we are really focused on the sustainability of these businesses: that they can continue to grow and be strong supporters in the economy."
Nine organizations in Minden, LA have teamed up on a project known as The Collaboration, which will seek to help entrepreneurs start and grow their small businesses. It will also foster development of existing companies. The Louisiana Economic Development office has changed its small business lending criteria to enable more widespread eligibility for state loans. Through The Collaboration, banks will be more inclined to lend to startup businesses.
The Huffington Post examines the Beneficial State Bank and Beneficial State Foundation as an alternative banking model with a large societal benefit. CEO Kat Taylor said in an interview, "You have to have a model that cares as much about environmental and social capital as it does about financial capital. Only within a community of practice like this can we create the muscle memory to do that, and to make the combined effort to monitor outcomes that will tell us whether we are doing that or not."
The new First Southwest Bank Center for Economic Opportunity at Adams State University will open its doors in January 2018, and it focused on community-based strategic planning and trainings to promote local business startups and improve job creation and retention. "We're excited about the future opportunities for business growth in the San Luis Valley, a place with unique heritage and incredible people," said Kent Curtis, CEO of First Southwest Bank. "And First Southwest Bank is truly committed to building more small businesses, networks, and opportunities for our rural Colorado community."
This report from the Federal Reserve Bank of Philadelphia summarizes innovative activities from banks' Community Reinvestment Act (CRA) performance evaluations in the areas of job creation, education and workforce development, and transportation and affordable housing. It also examines potential mechanisms through which the CRA could help promote economic prosperity and alleviate poverty in the process of channeling capital into low- and moderate-income communities.
Sunrise Banks and Hiawatha Academies have partnered to mobilize some of Sunrise's recent $70M New Markets Tax Credit allocation to construct a new campus for Hiawatha Collegiate High School. The school enrolled 475 students this fall, and through this new facility, it will grow to a full capacity of 788 students and 84 staff. "The Hiawatha Academies project is a great example of the positive impact of the NMTC Program one block at a time," said Sunrise Banks CEO David Reiling.
Earlier this month, minority bankers from across the country convened in Washington, DC to discuss wealth-building strategies. Carver State Bank President Robert James spoke at the conference, addressing the need for black-owned banks to tailor their marketing materials to attract millennial customers.