The Biden administration has requested $325 million to be
allocated to the Community Development Financial Institutions (CDFI) Fund in
its proposed budget for fiscal year 2025. If approved by Congress, the proposal
would represent a $1 million increase in CDFI Fund allocations from last year and
a $55 million (20 percent) increase from the 2021 budget.
The proposal also includes a $10 million subsidy for the
CDFI Fund’s Bond Guarantee Program, which was created to address the shortage
of long-term affordable credit for development projects in disadvantaged
communities. This subsidy also is intended to broaden access to the Small
Dollar Loan Program to allow more organizations to participate. The program
supports individuals seeking affordable loans to help build credit, as well as
alternatives to expensive payday loans.
Under the proposed budget, the New Markets Tax Credit (NMTC)
program, set to expire in 2025, would be made permanent, as was advocated by the
American Bankers Association and more than 700 other organizations, including
several state banking associations and multiple individual banks and credit
unions, in a letter sent to the Biden administration and Congress in October of
last year.
“We strongly support making the NMTC permanent by passing
the bipartisan NMTC Extension Act (S. 234 and H.R. 2539),” the letter states. “In
addition to extending the program at $5 billion in allocation per year, the
legislation would provide an inflation adjustment for future years. It also
includes reforms to ensure the NMTC program maintains its efficiency during an
economic downturn when it is needed the most.”
America’s Credit Unions (ACU) released a statement noting
that 516 of the 1,460 certified CDFIs are credit unions, accounting for the
largest proportion of CDFI financial institutions.
The CDFI Fund offers grants and awards to certified
institutions, providing technical and financial assistance designed to expand
financial access in underserved communities.