News
A trio of investment funds established to inject capital into minority-owned banks and community development financial institutions share the same ambitious goal: eliminating the nation's racial wealth gap. To date, however, the collective impact of MDI Keeper's Fund, the Black Bank Fund and the Federal Deposit Insurance Corp.'s Mission-Driven Bank Fund has been limited. One big reason is that other sources of capital — namely, large banks and the federal government — are also making investments in minority depository institutions and CDFIs. The recent influx of cash — largely the result of big financial commitments to Black banks that followed the murder of George Floyd — means that some historically undercapitalized institutions don't need capital right now. M&F Bank and Optus Bank are mentioned.
There's money to be made for banks that offer low-cost deposit accounts to previously unbanked or underbanked households. That's one of the key takeaways from a recent Federal Reserve Bank of St. Louis report that looks at new account openings, debit transactions and online banking activity, associated with Bank On checking accounts. Bank On accounts, offered by dozens of banks, must charge no overdraft fees and no-fee debit cards, among other things, as designated by the nonprofit Cities for Financial Empowerment Fund. Last year, customers at 17 financial institutions opened 2.2 million new Bank On checking accounts. Among those, 82% were new customers and 79% regularly used online banking options, the St. Louis Fed said in a report based on information submitted to its Bank On National Data Hub.
Durango resident Jenni Gross was out of work for more than eight months after the building where she leased space for her business, The Soup Palette, was sold to a new owner, and she was forced to close. Today she operates out of a food truck she was able to purchase through a unique lending partnership between the First Southwest Bank and its sister non-profit. Hundreds of entrepreneurs in Southern Colorado have been able to start or expand their businesses thanks to a unique partnership between the First Southwest Bank and its sister non-profit, the First Southwest Community Fund. During the pandemic, the community fund established the Innovate Onwards Program to provide businesses with low-interest loans for working capital to rehire staff, upgrade equipment, or purchase inventory. Another program, the Creative Arts Fund, provides low-interest loans for up to $15,000 to artists and arts businesses to purchase materials, establish a gallery, or even an online presence. More recently, the community established a food truck loan fund to help entrepreneurs affordably enter the food industry.
Values-based community bank Climate First Bank has partnered with Project Regeneration to develop a one-of-a-kind checking account that will support, promote and create funding for the environmental nonprofit's mission of planetary regeneration. When a client opens a Project Regeneration checking account, a $100 donation will also be made directly to Project Regeneration to assist with the foundation’s sustainable initiatives. In addition to the one-time contribution, monthly earnings garnered from the interest on all balances will be donated to the foundation. The account will also have no minimum account balance and no monthly fees.
Across the country, community groups are soliciting e-bike companies for help competing for state money in the hopes of getting more people riding. Cities like Portland, Denver, and Buffalo are launching pilot projects that explore ways to subsidize e-bike purchases for low-income families or collect enough bikes together to launch mini-shared micromobility services. But the goal isn't just to get more people on e-bikes; it's also about reducing tailpipe emissions and saving the planet. Through a partnership with Spring Bank and grants from the state government, the Equitable Commute Project is hoping to subsidize the cost of VanMoof e-bikes in the Bronx by up to 50 percent. That means instead of shelling out $2,298 for the S3 e-bike, customers would only have to pay $1,149.
A new small-dollar loan for borrowers with limited credit histories has emerged from a partnership between a community development financial institution and a fintech. NAAC Finance, the new digital lending arm of the National Asian American Coalition, developed the product with Asenso Finance, a startup that processes and services loans for financial institutions. The loan has two unusual features: Customers must complete financial literacy training before their loan is approved, and alternative data such as income is used in the underwriting. The relationship between NAAC — a CDFI in Daly City, California — and Asenso in Manhattan Beach, California, has an unusual origin.
Giant Food announced on Wednesday that they are investing $50 million to support The Harbor Bank of Maryland, the state's only black-owned and -managed commercial bank. The investment will increase the amount of loans the bank is able to give out. Through this investment, Giant and Harbor Bank aim to help underserved communities by bolstering local businesses, as well as technological and personal advancement.
In October, the Community Development Financial Institutions Fund (CDFI Fund) reported that its Awards Management Information System (AMIS) would be transitioning to an updated user interface. Originally scheduled to occur in mid-December, the conversion to the Salesforce Lightning environment is now scheduled to take place on January 14, 2022. Questions regarding AMIS can be submitted via a Service Request in AMIS, email at amis@cdfi.treas.gov, or phone at (202) 653-0422.
Over the past year, increased funding and enhanced recognition of the role Community Development Financial Institutions (CDFIs) play in facilitating economic recovery, inclusion and opportunity in distressed and underserved communities has generated a dramatic increase in the number of organizations seeking Certification as a Community Development Financial Institution (CDFI). In order to right-size expectations of the time needed to provide a decision, going forward, the CDFI Fund can no longer commit to providing determinations on CDFI Certification Applications and Target Market Modification applications within 90 days. The CDFI Fund will review and provide determinations as quickly as reasonable.
Over the past year, increased funding and enhanced recognition of the role Community Development Financial Institutions (CDFIs) play in facilitating economic recovery, inclusion and opportunity in distressed and underserved communities has generated a dramatic increase in the number of organizations seeking Certification as a Community Development Financial Institution (CDFI). In order to right-size expectations of the time needed to provide a decision, going forward, the CDFI Fund can no longer commit to providing determinations on CDFI Certification Applications and Target Market Modification applications within 90 days. The CDFI Fund will review and provide determinations as quickly as reasonable.