CDFI Small Dollar Loan Applications Far Exceed Available Funding
Applications for the CDFI Fund's Small Dollar Loan Program far exceeded available funding, with the majority of requests coming from credit unions.
Majority of funding requests are from credit unions.
CDFIs have submitted applications requesting $32.1 million from the CDFI Small Dollar Loan Program—almost three times the amount of funding available, the Treasury Department announced Friday.
Up to $11.1 million is available for awards through the program.
Some 92 organizations requested funding in the second year of the program, CDFI Fund officials said, adding that 45 applications came from credit unions, 31 were from loan funds and 16 were from banks or bank holding companies.
Inside the Numbers
Six organizations requested $1.7 million in loan loss reserve funds. Those awards enable a CDFI to establish a loan loss reserve fund in order to cover losses on small dollar loans.
Nine organizations requested $1.3 million in technical assistance awards. Those awards support technology, staff, and other eligible activities to establish and maintain a small dollar loan program.
Fund officials said that 77 organizations requested $29.1 million in grants for combined loss reserve and technical assistance programs.
Nationwide, CDFI small dollar loan program applications came from financial institutions in 36 states, Washington, D.C. and Puerto Rico.
The FY22 application period closed on July 15 and the CDFI Fund expects to announce the awards next month.
The SDL program provides grants to support small dollar loan programs at certified CDFIs as long as they:
–Provide loans not to exceed $2,500.
–Require borrowers to repay their loans in installments.
–Have no prepayment penalty.
–Have payments that are reported to at least one of the consumer reporting agencies that maintain files on consumers.
The SDL program does not provide funds for direct loans to consumers.
Outlook for the Program
During the FY21 round of the program, the CDFI Fund awarded more than $10.8 million in grants for the SDL program.
The CDFI Coalition, a group that advocates on behalf of CDFIs, has requested no less than $31 million in FY23 for the program.
However, so far Congress has called for much less than that.
In its FY23 Financial Services appropriations measure, the House called for $10 million for the program. The House has passed that funding measure.
Democrats on the Senate Appropriations Committee have included $9 million for the SDL program. The Senate has not yet considered its FY23 spending bills.
The Treasury Department recently announced it will not accept new applications for CDFI Certification between October 1 and April 3, 2023, as it attempts to overhaul the certification application process.