Testimony of Lisa Mensah, Opportunity Finance Network — Senate Small Business Committee, March 17, 2021

Summary

Written testimony of Lisa Mensah, President and CEO of the Opportunity Finance Network, provided to the Senate Committee on Small Business and Entrepreneurship on March 17, 2021 for the hearing The Paycheck Protection Program: Performance, Impact, and Next Steps. The statement argues that community development financial institutions are critical to getting PPP and other relief to underserved businesses. It credits HR 133, Consolidated Appropriations Act, 2021 with $284 billion in new PPP funds and a $15 billion set-aside for CDFIs and other mission lenders. It describes problems in the rollout of the new round, including SBA platform glitches and delayed guidance, and later SBA changes such as a two-week window for businesses with fewer than 20 employees. The testimony gives examples of CDFI Round 2 lending and urges Congress to invest in scaling the CDFI industry.

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                                     Testimony of Lisa Mensah
                       President and CEO, Opportunity Finance Network
        Provided to the Senate Committee on Small Business and Entrepreneurship
                                           March 17, 2021


Thank you for holding this hearing entitled: “The Paycheck Protection Program: Performance,
Impact, and Next Steps”. My name is Lisa Mensah, President and CEO of the Opportunity Finance
Network (OFN). I am pleased to be here today to testify about why community development
financial institutions (CDFIs) are critical to helping the Paycheck Protection Program (PPP) and
other federal relief reach underserved businesses.

OFN is a national network of CDFIs: mission-driven community development banks, credit unions,
loan funds, and venture capital funds investing in opportunities that benefit low-wealth
communities across America. As specialized lenders that focus on underbanked communities,
CDFIs are uniquely poised to deliver federal relief resources to businesses owned by people of
color, very small businesses, and other under-resourced businesses in urban, rural, and Native
communities.

For nearly 40 years, CDFIs have provided responsible, affordable capital where it is needed most:
CDFI customers are 84 percent low-income, 60 percent people of color, 50 percent women and 26
percent rural.1 Nationwide, the more than 1,100 CDFIs certified by the US Treasury Department’s
CDFI Fund manage more than $222 billion. CDFIs are also experienced small business lenders with
deep expertise reaching low wealth markets. In fiscal year (FY) 2019, certified CDFIs had more
than $24 billion of small business and microloans in their portfolios. 2 With cumulative net charge-
off rates of less than 1 percent, CDFIs lend prudently and productively in markets underestimated
by mainstream banks.3

The State of America’s Small Businesses

One year into the pandemic, America’s small businesses are still suffering from the economic
impacts of COVID-19. The Census Bureau’s “Small Business Pulse Survey” found that in early
March 2021, nearly 72 precent of small businesses report the pandemic had a moderate or large
negative impact on their business.4

The Federal Reserve’s 2021 Small Business Credit Survey Report found 57 percent of firms
characterized their financial condition as “fair” or “poor.” That number increases to 79 percent for
Asian-owned firms and 77 percent for Black-owned firms. In addition, the share of firms that
experienced financial challenges in the prior 12 months rose from 66 percent to 80 percent
between 2019 and 2020. In response to those challenges, 62 percent of businesses firms used
personal funds and 55 percent cut staff hours and/or downsized operations. 5


1 Opportunity Finance Network, “Impact Performance”, https://ofn.org/impactperformance
2 Opportunity Finance Network, 2019 CDFI Fund Annual Certification Reporting Database”, Accessed

November 19, 2020.
3 Opportunity Finance Network, “Impact Performance”, https://ofn.org/impact-performance
4 U.S. Census Bureau, “Small Business Pulse Survey”, March 11, 2021, Accessed March 13, 2021,

https://portal.census.gov/pulse/data/
5 Federal Reserve, “2021 Small Business Credit Survey Report on Employer Firms”, Accessed March 13, 2021,

https://www.fedsmallbusiness.org/medialibrary/FedSmallBusiness/files/2021/2021-sbcs-employer-firms-
report
As small businesses struggle, they continue to look to the federal government for assistance. The
Paycheck Protection Program (PPP) is one of the cornerstones of the federal government’s COVID-
19 response – with more than $800 billion allocated so far. The program has helped many small
businesses survive the pandemic. More than 90 percent of small businesses surveyed in the Small
Business Credit Survey sought emergency funding to weather the financial impacts of the
pandemic – 82 percent applied for PPP.6 The popularity of the program makes it even more
imperative to implement improvements to make it more effective. As OFN noted in previous
testimony before the Senate Small Business and Entrepreneurship Committee, Round 1 of PPP was
riddled with challenges, resulting in many eligible businesses – especially minority-owned women-
owned, and businesses in low-wealth communities - missing out on accessing a PPP loan.7

Praise to Congress for making Critical Improvements to PPP in COVID-19 Relief
Legislation
Late last year, after continued urging by OFN, community lenders, and small businesses, Congress
prioritized small businesses located in low-wealth communities in the extension of the PPP. The
new round of PPP delivered as part of HR 133, Consolidated Appropriations Act, 2021 provided
$284 billion in new PPP funds along with programmatic improvements to improve the program’s
reach and flexibility.8 OFN was pleased to see Congress restructure and reform the PPP to reach
the most underserved small businesses.

These program modifications helped CDFIs take a larger role in PPP lending including:

          •   $15 billion set-aside for CDFIs, Minority Depository Institutions (MDIs), and other
              mission lenders;
          •   Set-asides for first-time PPP loans to businesses with 10 or fewer employees, sole
              proprietors and the self-employed, nonprofits, and for loans less than $250,000 to
              businesses located in low- to moderate-income (LMI) areas;
          •   Allowing second draw PPP loans for hard-hit businesses;
          •   Simplifying the forgiveness application process for loans of $150,000 or less;
          •   Repealing the requirement to deduct an Economic Injury Disaster Loan (EIDL) advance
              from the PPP forgiveness amount;
          •   Changing the fee structure to ensure lenders could continue to make smaller loans and
              provide the technical assistance needed to navigate the application and forgiveness
              process; and
          •   Clarifying the tax status of business expenses paid with forgiven PPP loans.

Rocky Initial Implementation of New PPP Round

The new round of PPP built on the lessons learned from the first round, starting from a much
stronger foundation. With the new changes in place, lenders were optimistic about implementation
of this round of PPP – hoping many of the bumps along the way had been smoothed. The CDFI
industry was encouraged by the SBA’s recognition that CDFIs and other community lenders are
best positioned to drive PPP resources to minority-owned, women-owned, and other underserved




6 Ibid.
7 Opportunity Finance Network, OFN Testimony on the Future of the Paycheck Protection Program before the

Senate Small Business Committee, December 10, 2020,
https://www.sbc.senate.gov/public/index.cfm/hearings?ID=FC8E242C-B966-4C5A-AD3C-83E17DDE6704.
8 https://www.congress.gov/bill/116th-congress/house-bill/133




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businesses. Unfortunately, some of the efforts to prioritize the needs of these small businesses
were hampered by missteps in the program rollout.

The scale of the crisis facing small businesses necessitated rapid implementation of this new round
of PPP. Receiving aid quickly was especially critical for very small, minority owned, and other
marginalized businesses prioritized by Congress and the SBA. To reach these targeted businesses,
only community financial institutions (CFIs), including CDFIs, were permitted to submit PPP
applications when the program opened on January 11, 2021. Larger lending institutions were
prohibited from submitting applications until January 19, 2021.

When this exclusive application window was announced, CDFIs and other CFIs raced to understand
SBA’s new systems and program rules, many of which were published only hours before the
scheduled opening of the application period. In addition, CDFIs encountered challenges with the
SBA’s new lending platform, delayed and incomplete guidance from SBA, and limited access to
technical assistance:

   •     New lending platform - SBA moved to a cloud-based platform aimed at reducing
         bottlenecks created when large number of applications from large lenders were submitted at
         once. However, guidance to help lenders use the system to process new PPP applications
         was unveiled just a few days before the portal opened, leaving little time for staff training or
         technical assistance. One CDFI noted that the initial glitches in the new SBA platform slowed
         their productivity by as much as 80 percent. In addition, the borrower information that was
         prepopulated in the E-tran system was not available in the new system portal. Lenders had
         to resubmit the information, wasting valuable processing time during the dedicated window.

         OFN members also noted that the shift from automatic approvals in the 2020 round of PPP
         to a loan approval time of up to 48 hours in 2021 slowed their ability to process a high
         volume of loans. Lenders expressed frustration as there was strong demand from new and
         existing customers for first and second draw PPP loans.

   •     Delayed and incomplete guidance - New loan documents and guidelines related to
         eligible uses of funds, expanded eligibility for new applicants, and requirements for
         borrowers seeking a second PPP loan were all made available to lenders less than 48 hours
         before the opening of the portal to CFIs. SBA's guidance on documentation requirements
         and critical details on the calculation of gross receipts was not released until January 17th
         and January 19th, more than a week after opening the program to CFIs. There were even
         more delays on obtaining guidance and materials on the accelerated applications for
         forgiveness on loans less than $150,000. The opening of the program to the public without
         key guidance created confusion and impacted the ability of CFIs to appropriately serve their
         customers.

   •     Limited access to technical support - Some CDFIs noted difficulty accessing timely
         assistance through SBA’s helpline when technical problems arose. Updates to the PPP
         lending portal were made even as CFIs were processing loans, but without SBA providing
         appropriate technical assistance to help lenders understand those changes. Specifically, OFN
         members report that error messages were confusing, key calculations for loan amounts
         were inaccurate, and their staff encountered problems trying to connect with SBA staff.

         For example, calls to the PPP lender platform hotline directed you to submit an email, but
         most of those emails did not receive a reply – one lender reported only one of ten emails
         submitted received a response. While SBA did warn lenders to have patience and expect



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         delays, these technical challenges negatively impacted the ability of CDFIs to fully take
         advantage of the dedicated access when the program opened.

Although the initial rollout of PPP Round 2 was very challenging, CDFIs and other small lenders
once again stepped up to deliver critical relief to small businesses. During the dedicated window,
CFIs made more than 60,000 PPP loans totaling more than $5 billion. 9

Biden Administration Changes Provide Targeted Relief to Underserved Small Businesses

In February, the Small Business Administration implemented additional changes designed to
prioritize the needs of very small businesses and businesses located in low- and moderate-income
communities including:

   •     Exclusive access for very small businesses - A two-week window of dedicated access to
         the PPP loan system for businesses with fewer than 20 employees. During that period, the
         SBA only processed applications from those very small businesses. This dedicated access
         meant all lenders – not just mission lenders - were focused on the needs of underserved
         borrowers. This was an important policy decision that truly centered the needs of these
         businesses.

   •     Recalculation of income for Schedule C filers - Changes to income calculations for sole
         proprietors, independent contractors, and self-employed people to allow these businesses to
         apply for a loan through the program based on gross income rather than net income. The
         change will significantly increase the amounts for which these very small businesses qualify.
         OFN member Hope Enterprise Corporation noted the impact: a Black woman-owned
         boutique in Alabama qualified under the old rules for a PPP loan of $7,469. With the
         changes, she would qualify for a loan of $22,659.

   •     Focus on low- and moderate-income communities - An additional $1 billion set aside
         for businesses with employees located in low- and moderate-income areas, providing
         dedicated resources and greater access to PPP for many CDFI customers.

   •     Expanded borrower eligibility - Easing restrictions on borrowers with non-fraud felony
         convictions, delinquent student loan debt, and Individual Taxpayer Identification Number
         (ITIN) holders. CDFIs report that expanding eligibility increased demand for PPP loans
         among borrowers with nontraditional credit histories.

   •     Greater communication and outreach to lenders - SBA improved communication with
         lenders through webinars, direct phone calls to raise awareness of program changes and
         encourage lender participation. OFN has appreciated participating in weekly update calls
         with SBA which allowed us to reinforce SBA guidance with our members and share
         information in a timely manner.

   •     Improvements to technical problems - There were also improvements to some of the
         technical problems lenders encountered in the early days of Round 2. SBA ramped up
         processing of forgiveness applications and clearing hold and error codes, allowing thousands
         more applications to move forward.


9 U.S. Small Business Administration, “60,000 Paycheck Protection Program Loans Approved in First Week”,

Release Number 21-11, January 19, 2021. https://www.sba.gov/article/2021/jan/19/60000-paycheck-
protection-program-loans-approved-first-week


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Prioritizing the needs of these borrowers yielded results. The Biden Administration reports that
during the two-week exclusive access window there was a 14 percent increase in loans to women-
owned businesses, a 20 percent increase in loans to minority-owned businesses, a 12 percent
increase in loans to businesses in rural areas, a 15 percent increase to businesses with fewer than
five employees and a 25 percent increase to first-time borrowers.10

CDFIs have continued to be an integral part of reaching these businesses. The share of CDFI
lending in PPP is 60 percent higher than in PPP Round 1. The following are examples of CDFI PPP
lending in Round 2:

   •     Albuquerque, New Mexico- based DreamSpring has made 1,822 PPP loans totaling $48
         million to small businesses in Arizona, Colorado, Florida, Georgia, Illinois, Iowa, Kansas,
         Missouri, Nevada, New Mexico, New York, North Carolina, Oklahoma, Texas, Utah, and
         Washington. The average loan size is approximately $26,000.

   •     Washington, DC–based LEDC made 64 PPP loans totaling $1,4 million to businesses in DC,
         Maryland, Virginia, and Puerto Rico. The average loan size is $21,501 – with an average
         loan size for businesses in Puerto Rico of $10,460. LEDC has received a high number of
         first-draw applicants, with most being sole proprietors, and reports an increase in the
         number of applications from their Puerto Rico market.

   •     Missoula-Montana-based MoFi, a CDFI serving Montana, Idaho. Oregon, Utah, Washington,
         and Wyoming made 1,466 Round 2 PPP loans totaling more than $28.87 million. The
         average loan size is $24,329. Sixty percent of MoFi’s PPP clients found the CDFI through a
         bank or credit union referral.

   •     Austin, Texas-based BCL of Texas approved 84 loans totaling $2.34 million with an
         average loan size of about $27,900, All of BCL’s Round 2 PPP loans are to businesses with
         fewer than 20 employees. The CDFI also reports an increase in volume of borrowers who
         now qualify through their annual gross income borrowers after the changes to the Schedule
         C filer loan application.

   •     Bedford, Texas-based Capital Plus Financial approved more than $99 million in PPP loans
         in Round 2 PPP loans with 95 percent of the loans for less than $150,000. The average
         business served has fewer than five employees, and the smallest PPP loan approved was
         $400.

Despite Improvements, Challenges Remain for PPP Lenders and Borrowers

OFN applauds SBA for continuing to make changes and conduct outreach to lenders and borrowers.
The PPP has been a valuable lifeline to the businesses able to secure access, but challenges
continue for participants:




10 U.S. Small Business Administration, “Fact Sheet: Changes to Paycheck Protection Program by Biden-Harris

Administration Increase Equitable Access to Relief”, March 9, 2021,
https://www.sba.gov/article/2021/mar/09/fact-sheet-changes-paycheck-protection-program-biden-harris-
administration-increase-equitable-access



Page 5
   •     Access to capital for lenders – Some CDFIs were limited in their ability to make more
         PPP loans because of challenges accessing lending capital. The Federal Reserve’s PPP
         Lending Facility (PPPLF) has been critical to those who are able to access it, but not all
         CDFIs have been able to participate. Some CDFIs were able to access the facility by
         developing correspondent relationships with depository institutions that have master
         accounts with the Federal Reserve. However, the process was delayed and complex, limiting
         access to liquidity at a critical time when CDFIs needed it most. OFN is pleased to see the
         PPPLF extended through June 30. This will be especially valuable should Congress extend
         the PPP application deadline.

   •     Delayed guidance from SBA - SBA guidance to operationalize the changes put forth by
         the Biden Administration has not been timely. The Interim Final Rule related to the changes
         in Schedule C income calculations was not made available until March 3, 2021, again taking
         valuable time away from small businesses seeking to take advantage of the higher loan
         amounts.

   •     Forgiveness process – Several CDFIs noted the SBA is conducting onerous review of loan
         forgiveness applications, making documentation requests related to first round forgiveness
         in spite of the clear directive of Congress to streamline the process for smaller loans. Some
         CDFIs had to dedicate full-time staff to supporting clients whose loans are selected for
         forgiveness review by the SBA – reducing the time staff spend processing new PPP loans.
         The average loan size under review is modest, with many in the $1,000 range. Congress
         should clarify that the streamlined forgiveness process applies to all PPP leans, regardless of
         when the loan was made.


Significant Additional Federal Investment Needed to Support Small Business

The PPP was an important first step in addressing some of the challenges facing small businesses,
but more must be done. With the prospect of pandemic restrictions on businesses easing as
vaccination rates rise relief efforts must start to transition into recovery efforts. The lessons
learned from the implementation of PPP should be carried forth in SBA’s economic recovery
programs. Federal recovery initiatives, particularly those at SBA, must be targeted to reach the
most vulnerable businesses to ensure a more inclusive economic recovery. Federal programs that
do not reach businesses owned by women, people of color, rural businesses, and other
underbanked business are not successful and must be reformed.

In HR133, Congress made a significant investment in the CDFI industry’s capacity by providing $3
billion in emergency grants. In addition, the recently passed American Rescue Plan includes
support for small businesses through a $10 billion State Small Business Credit Initiative with set-
asides for very small business, tribal businesses, and economically and socially disadvantage
businesses. These federal investments are an important down payment but more is needed.

The following are OFN recommendations that will help ensure new federal resources reach the
intended communities by enhancing the capacity of CDFIs to support the economic recovery:

   •     Provide $1 billion in annual appropriations for the CDFI Fund – The federal
         government put a down payment on the CDFI industry in HR133. More investments at this
         scale are needed. An annual appropriation of $1 billion for the CDFI Fund is critical to
         strengthening CDFIs to continue assisting in the long term recovery of low-wealth
         communities. To truly achieve an inclusive recovery, the federal government must increase
         the supply of capital to CDFIs, mission based responsible lenders that are adept at


Page 6
         channeling those resources into distressed communities. This investment will also broaden
         the reach and impact of the federal government’s investments.

         While the PPP set-asides were critical in helping capital flow to small business owners
         impacted by the pandemic, only a small subset of CDFIs were able to become PPP lenders,
         and they used their own lending capital to make PPP loans to small business customers.
         SBA pays a small servicing fee to PPP lenders for each loan they make, but the funds for the
         loan itself comes from the PPP lender.11 PPP loans are a short-term, focused financing tool
         to meet an immediate small business need, not a substitute for critical equity capital CDFIs
         need to support the medium- and long-term economic recovery. CDFIs are well positioned
         to respond to the financial needs of low wealth markets but need their own balance sheets
         to be stable in order to contribute to the economic recovery. This balance sheet stability is
         essential to allow CDFIs to continue to leverage private and philanthropic resources.

   •     Extend PPP through May 31 – OFN urges Congress to quickly pass the PPP Extension Act
         of 2021 to extend the deadline until May 31, 2021 and provide an additional 30-day period
         for the SBA to process applications that are still pending. Thousands of business owners will
         not receive access to PPP without an extension. If the SBA PPP program closes on March 31,
         Jackson, MS-based CDFI HOPE estimates 1300 loans for businesses that have applied for
         assistance will not be funded – of which 98 percent are businesses with fewer than 20
         employees, 95 percent are minority-owned businesses, and nearly 100 businesses are
         veteran or veteran spouse-owned businesses.

         As other lenders are closing down their programs early and/or not complying with the newly
         enacted Schedule C changes, these smallest businesses, particularly those in communities
         of color, continue to seek PPP loans from CDFIs. These lenders then have the triple duty of
         processing loans already in the pipeline, working to implement the new Schedule C changes
         which benefit most of their borrowers, and picking up the unmet need left by the banks’
         inaction. An extension would enable all lenders to meet the ongoing demand for PPP loans.

   •     Make retroactive Schedule C income calculations - The new loan calculation for
         Schedule C filers is only available to businesses approved after the regulations were
         finalized on March 3, 2021. If businesses have already been approved, they cannot re-apply
         or gain access to the new formula changes unless Congress makes the changes retroactive,
         as they have done for ranchers and farmers. SBA has suggested approved businesses
         cancel PPP loans and reapply, however, with many lenders making provisions to stop taking
         applications by the middle of March, some businesses may receive no relief at all. Unless
         Congress acts to make the Schedule C changes retroactive, these businesses will not benefit
         from the recalculation of their PPP loan size based on gross income.

   •     Direct SBA resources to small businesses located in low-wealth markets or owned
         by historically underserved groups – The inability of SBA’s core programs to reach low
         wealth communities, businesses owned by people of color, very small businesses, and other
         under-resourced businesses can no longer be accepted. The success of refocusing PPP to
         meet the needs of the most underserved borrowers demonstrates the importance of SBA
         using the entirety of its resources to stabilize and support the most vulnerable small
         businesses.


11 U.S. Small Business Administration, “Paycheck Protection Program Interim Final Rule”, Issued April 2, 2020.

https://www.sba.gov/document/policy-guidance--ppp-interim-final-rule


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         Congress must make improvements to the SBA’s core programs, including 7(a), Community
         Advantage, 504, and the Microloan program to ensure that their primary focus is increasing
         access to capital for these businesses. To survive the pandemic, businesses will need access
         to responsible, affordable loans, credit enhancements, and working capital in addition to
         PPP’s payroll support. Programs that prioritize CDFI participation like the 7(a) Community
         Advantage program and the SBA Microloan program are more successful at reaching
         underserved businesses, especially businesses owned by women and people of color.
         Enhancing CDFI participation and making improvements to these programs will help reach
         more underbanked businesses.

   •     Fully Fund Section 1112 CARES Act debt relief program - The SBA’s debt relief
         program was a critical lifeline for many CDFIs and their borrowers. The six months of
         payments eased borrower’s debt burden while the SBA’s payments of interest and fees to
         lenders helped relieve stress on balance sheets from lost revenue. For some CDFIs, this
         additional capacity enabled them to offer their own emergency loan products or administer
         state and local aid programs.

         The $3.5 billion provided for the debt relief program in HR133 was insufficient to fund these
         extensions, causing SBA to proportionally reduce the number of months of relief provided to
         each borrower. The economy is still fragile, and many small business owners can ill afford to
         start making debt payments, especially those with loans under the Community Advantage
         and Microloan programs. OFN urges Congress to provide more funding for Section 1112
         payments to ensure small businesses continue to have access to the capital they need to
         keep their doors open.

   •     Make permanent the Community Advantage pilot program - More than a decade after
         its inception, the SBA’s 7(a) Community Advantage program remains in pilot phase despite
         its proven ability to reach underserved borrowers. In addition, the definition of underserved
         borrower remains too narrow – excluding women and people of color at a time when their
         businesses are in most need of access to capital. Congress must make these program
         changes before the pilot program is set to expire in 2022.

   •     Make permanent enhancements to Microloan and Community Advantage programs
         HR 133 made temporary changes to the SBA Microloan and Community Advantage
         programs. Congress should make these changes permanent:

            •   increase the amount of time Microloan borrowers have to repay their loans to eight
                years;
            •   increase the outstanding aggregate amount each Microloan intermediary may borrow
                from $6 million to $10 million;
            •   waive the Microloan program’s matching requirements for the technical assistance
                grants and the 50 percent limitation on pre-loan technical assistance; and
            •   increase to 90 percent the loan guarantee amount for Community Advantage loans.

   •     Repeal the Microloan Program’s 1/55th Rule - Congress should also repeal the
         Microloan program’s 1/55th rule that prevents SBA from distributing more than 1/55 th of its
         funding in any given state during the first half of the year. Microlenders are on the front
         lines of saving small business in America. The patient, flexible capital and technical
         assistance offered by microloan intermediaries is more important than ever in the current



Page 8
         economic and health crisis. The 1/55th rule is a serious impediment to finds reaching high-
         need areas.

         Designed to ensure widespread availability of program funds, the rule is no longer needed.
         The Microloan program is widely available; there are 154 intermediaries working in 46
         states, the District of Colombia and Puerto Rico. However, these organizations are in most
         cases unable to borrow additional funds to make microloans until the third or fourth quarter
         of the fiscal year. This creates an administrative bottleneck for the SBA, limits cash
         availability for lenders, and creates a paperwork burden for intermediaries. Eliminating this
         requirement will improve program efficiency and reach more businesses.

CDFIs are Essential to Financing Justice

The implementation of the Paycheck Protection Program has provided valuable lessons. Policies
that prioritize the needs of very small, minority and women-owned businesses and businesses
located in low-wealth communities achieve positive outcomes. Prioritizing these businesses
requires partnership with lenders that specialize in serving them; it takes CDFIs.

To truly reach the businesses and communities that need help the most, Congress must invest in
scaling the CDFI industry. Policymakers should incorporate CDFIs as partners across the federal
government and make major investments in proven solutions and programs that enable the
industry to grow. This is both an effective and smart investment for the federal government:
investing in CDFIs means small amounts of public subsidy are leveraged to amplify its impact.

The nation’s small businesses cannot afford for CDFIs to be an afterthought in public policy. The
PPP experience demonstrated that when CDFIs are empowered with supportive policies coupled
with capital they outperform other lenders. With targeted resources from the public sector and
partnership with CDFIs, our country’s small business sector can weather the pandemic and recover
to thrive. Focusing on reaching unbanked and underbanked businesses through CDFIs, the lenders
best equipped to serve them, will ensure a more equitable recovery.

Thank you for the opportunity to speak with you today. I look forward to your questions.




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