Yesterday, OFN President and CEO Lisa Mensah and other members of the OFN team spoke with U.S. Treasury Deputy Assistant Secretary for Community and Economic Development Gavin Beske, Treasury Deputy Assistant Secretary for Financial Institutions Policy Tyler Williams, and CDFI Fund Director Jodie Harris to discuss issues concerning the implementation of the Paycheck Protection Program (PPP) and to ensure PPP funds are able to reach CDFI small business customers.
This conversation follows the letter OFN sent to Treasury Secretary Mnuchin immediately after the passage of the CARES Act advocating for the inclusion of CDFIs in the PPP. Treasury officials indicated they are in the process of drafting additional guidance for entities that are not federally insured banks or credit unions or current SBA 7(a) lenders.
OFN emphasized two key points:
- Treasury needs to make all certified CDFIs eligible lenders under the PPP. OFN emphasized that CDFIs are uniquely positioned to reach small businesses in rural, urban, and Native communities that are often underserved by traditional banks. The credential of CDFI certification has a 25-year track record of success and currently serves as an eligibility screen for numerous public and private sector programs.
- Immediate public guidance from Treasury is needed to make it clear to lenders that 501(c)3 nonprofit loan funds are eligible to borrow under the PPP. The CARES Act and the interim final rule are clear that 501(c)3 nonprofit organizations are eligible borrowers; however, some banks have denied PPP applications from nonprofit CDFI loan funds, citing SBA regulations that make businesses whose primary business is lending ineligible for SBA loan programs.
Treasury officials were non-committal regarding what actions, if any, they would take in response to OFN’s recommendations. Additional guidance from Treasury and the SBA is expected to be released in the coming days.
OFN continues to advocate for CDFI access to the PPP with Treasury and SBA officials. We have also reached out to Congressional allies to recommend changes to the CARES Act in a “4th phase” COVID-19 response bill that Congress has begun discussing.
Please continue to share information about your experience with the program with OFN so we can better represent our industry to policy makers in Washington, D.C. Also, be sure to contact your Member of Congress to support $1 billion in supplemental appropriations for the CDFI Fund.