Emergency Capital Investment Program: Frequently Asked Questions (Updated August 11, 2021)

Summary

Frequently Asked Questions on the Emergency Capital Investment Program (ECIP) from the U.S. Department of the Treasury, updated August 11, 2021, covering the program established by Section 104A of the Community Development Banking and Financial Institutions Act of 1994. A footnote states initial FAQs were published on March 30, 2021, and that this update adds FAQs 1.8-1.12 and others. Questions address eligibility of credit unions, MDIs, de novo banks and institutions in Troubled Condition, and how to submit an application and Emergency Investment Lending Plan. FAQ 6.3 states that PPP loans will not be included in the baseline for calculating an increase in qualified lending or deep impact lending.

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“Emergency Capital Investment Program: Frequently Asked Questions (Updated August 11, 2021).” Original at home.treasury.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/treas-ecip-faqs-1f698a6e84/, SHA-256 b2929eb50f8f9a95baf0e430435f3be73f95a7bd3abb102ded32959412baa54d.

Full text

Updated August 11, 2021

EMERGENCY CAPITAL INVESTMENT PROGRAM
U.S. Department of the Treasury

Frequently Asked Questions

The U.S. Department of the Treasury (Treasury) is issuing this document to address frequently
asked questions about the Emergency Capital Investment Program (ECIP), which was
established by Section 104A of the Community Development Banking and Financial Institutions
Act of 1994 (added by the Consolidated Appropriations Act, 2021). Treasury intends to provide
timely guidance to address questions concerning all aspects of the ECIP and may update this
document periodically. 1

Table of Contents
1. Eligibility.............................................................................................................................................. 4
1.1 What types of institutions are eligible to participate in the ECIP? ............................................... 4
1.2 Is any credit union that has a low-income designation eligible to participate in the ECIP? ......... 5
1.3 What are the criteria to be an MDI for purposes of participation in the ECIP? ............................ 5
1.4 Is a de novo bank or credit union eligible to participate in the ECIP? .......................................... 5
1.5 Is a BHC or SLHC that has not yet been certified as a CDFI or designated as an MDI eligible to
participate in the ECIP? ............................................................................................................................ 6
1.6 Can more than one affiliate of a BHC or SLHC separately apply to the ECIP? ........................... 6
1.7 As of what date must an ECIP applicant be a CDFI or MDI to be eligible to participate in the
ECIP?
1.8 May an institution that is designated in Troubled Condition by its federal regulator obtain a
waiver from its primary federal regulator allowing it to participate in the ECIP? Similarly, if an
institution is currently designated in Troubled Condition but may have the designation removed soon,
is the institution eligible for the ECIP? ..................................................................................................... 6
1.9 If an institution is subject to a formal enforcement action arising solely from Bank Secrecy Act
program deficiencies, is the institution eligible for the ECIP? ................................................................. 6
1.10 How should an institution determine which of its affiliates should be listed as the ECIP
applicant on the program application? ...................................................................................................... 7
1.11 The CDFI Fund places limits on which programs CDFI institutions or their holding companies
can apply to in the same year. Do these rules apply to the ECIP? ........................................................... 8
1.12 If a CDFI has a compliance issue with a prior CDFI Fund award or is in a CDFI Fund
certification or program cure period, does it affect ECIP eligibility? ....................................................... 8
2. Application and Emergency Investment Lending Plan ................................................................... 8
2.1 How do I submit an ECIP application and emergency investment lending plan? ........................ 8
2.2 The ECIP application requires applicants to submit an Incumbency Certificate; what is the

1
Initial FAQs for the ECIP were published on March 30, 2021. On August 11, 2021, this update was issued to add
FAQs 1.8-1.12, 2.10-2.21, 3.3-3.6, 4.4-4.10, 5.2-5.7, and 6.3-6.4, and to make other ministerial changes.
certificate required to state? ...................................................................................................................... 8
2.3 Will Treasury provide an applicant’s primary federal financial regulator with a copy of the
applicant’s Emergency Investment Lending Plan that is submitted together with the ECIP application? 8
2.4 For purposes of the ECIP application and the Emergency Investment Lending Plan, what does
“fiscal year” mean? ................................................................................................................................... 9
2.5 Is an institution eligible to participate in the ECIP if its Emergency Investment Lending Plan
does not definitively prove that at least 30 percent of the institution’s lending over the past two fiscal
years, both by total number and dollar amount, was made directly to low- and moderate-income (LMI)
borrowers (as defined in the ECIP application), to borrowers that create direct benefits for LMI
populations, to Other Targeted Populations (as defined in the application form), or to any combination
thereof? ..................................................................................................................................................... 9
2.6 For purposes of Question 1(a) in the Emergency Investment Lending Plan, what are the
standards for determining whether loans are to borrowers or projects that “create direct benefits for
LMI populations?” .................................................................................................................................. 10
2.7 For purposes of rows 2 and 3 in Question 1(a) in the Emergency Investment Lending Plan, are
loans to businesses majority owned by LMI individuals or by Other Targeted Populations considered
“lending made directly to” LMI borrowers or Other Targeted Populations? ......................................... 11
2.8 For purposes of Question 1 in the Emergency Investment Lending Plan, may an applicant
include loans originated under the Small Business Administration’s Paycheck Protection Program
(PPP)? 11
2.9 For Purposes of Question 1(a) rows 3 and 5 in the Emergency Investment Lending Plan, may an
applicant include all lending made in “investment areas,” as defined in CDFI regulations (12 CFR
1805.201(b)(3)(ii)), as lending made directly to “Other Targeted Populations”?................................... 11
2.10 Can the applicant’s chief executive officer or chief financial officer delegate the authority to
sign the ECIP application? ...................................................................................................................... 11
2.11 The ECIP application asks whether an applicant may issue preferred stock to Treasury. Should
an applicant reply “yes” even if it must obtain shareholder approval to issue preferred stock? ............. 12
2.12 How should an applicant report total assets on the ECIP application? ....................................... 12
2.13 The Emergency Investment Lending Plan instructions state that “the Applicant must provide
documentation that supports its responses to questions 1 through 4 of the Emergency Investment
Lending Plan.” What types of documentation are required, and how should they be submitted? ......... 12
2.14 Question 1(a) in the Emergency Investment Lending Plan requires data for Fiscal Years 2019
and 2020. May an applicant elect to report activity for calendar years 2019 and 2020 instead? ........... 12
2.15 Row 5 in Question 1(a) of the Emergency Investment Lending Plan requires applicants to
specify their lending made to borrowers in census tracts that are “majority Other Targeted Populations”
not reported in rows 2, 3, and 4 of the table. How should this amount be calculated? .......................... 12
2.16 Question 2 of the Emergency Investment Lending Plan requires examples of certain types of
business activities. What types of examples are most helpful?.............................................................. 13
2.17 Questions 2, 3, and 4 of the Emergency Investment Lending Plan refer to various target
populations, such as “communities that may be disproportionately impacted by the economic effects of
COVID-19” and “low-income and underserved communities, including persistent poverty counties,
that may be disproportionately impacted by the economic effects of COVID-19.” Are these differences
intentional?.............................................................................................................................................. 13
2.18 In Question 3(b) of the Emergency Investment Lending Plan, what is the meaning of “LMI

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Minority communities”? ......................................................................................................................... 13
2.19 If the applicant is a BHC or SLHC that does not report lending, what lending information
should it report in its Emergency Investment Lending Plan? ................................................................. 13
2.20 Is it acceptable for the primary contact listed in the ECIP application to be a third party? ........ 14
2.21 The chief executive officer and chief financial officer certifications in the ECIP application
require the submission of the applicant’s most recent fiscal-year-end audited financial statements. How
should those financial statements be attached? ....................................................................................... 14
3. Investment Decisions ........................................................................................................................ 14
3.1 How will Treasury decide how to allocate the available capital among applicants that meet the
thresholds for eligibility? ........................................................................................................................ 14
3.2 When will Treasury begin making investment decisions? .......................................................... 15
3.3 Is an applicant required to request the statutory maximum investment amount based on the
institution’s asset size, or can it request a smaller investment? .............................................................. 16
3.4 Could an applicant be approved for less than the full amount of ECIP investment for which it
applies? ................................................................................................................................................... 16
3.5 What is the role of the bank regulatory agencies in reviewing ECIP applications? ................... 16
3.6 How does an applicant’s dividend or interest coverage ratio affect Treasury’s review of an
application? ............................................................................................................................................. 16
4. Terms of Preferred Stock and Subordinated Debt ........................................................................ 17
4.1 Can an institution choose whether to issue preferred stock or subordinated debt in the ECIP? . 17
4.2 What are the terms for the preferred stock and subordinated debt to be issued by institutions
participating in the ECIP? ....................................................................................................................... 17
4.3 What are the dividend or interest rates for preferred stock and subordinated debt issued in the
ECIP? 17
4.4 Are ECIP participants allowed to declare and pay dividends? ................................................... 17
4.5 If an ECIP participant achieves a dividend or interest rate in a year of 0.5 percent based on an
increase in qualified lending, will that rate remain unchanged in subsequent years, or could it increase?
17
4.6 What will be the dividend or interest rate on the preferred stock or subordinated debt after the
tenth anniversary of issuance? ................................................................................................................ 18
4.7 What are the reference periods for Treasury’s determination of the dividend or interest rate on
preferred stock or subordinated debt? How will loans originated in the first two years after issuance be
taken into account in determining the amount of qualified lending and deep impact lending? .............. 18
4.8 Do dividends or interest accrue during the first two years after the preferred stock or
subordinated debt? .................................................................................................................................. 18
4.9 If a credit union has a longstanding practice of paying a patronage dividend, would the credit
union need approval from Treasury to continue paying the dividend? ................................................... 18
4.10 How would borrower forbearance receive credit in qualified lending and deep impact lending?
19
5. Compliance and Reporting .............................................................................................................. 19
5.1 Are there additional requirements that apply to the ECIP? ......................................................... 19

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5.2 What type of loan data will institutions be required to collect and report? Will collection of
customer demographic data be mandatory? ............................................................................................ 19
5.3 How often will ECIP participants be required to submit reports to Treasury? ........................... 19
5.4 Treasury’s interim final rule on executive compensation, share buybacks, and dividends
requires ECIP participants to adopt a policy on excessive or luxury expenditures. How should
institutions determine if they are in compliance with this requirement? ................................................ 19
5.5 May an ECIP applicant that is not currently an S corporation but intends to elect to be treated as
an S corporation for federal income tax purposes in 2021 or 2022 issue subordinated debt to Treasury
before making the election? .................................................................................................................... 20
5.6 Is an ECIP participant that is not an S corporation at the time it issues preferred stock to
Treasury under the ECIP, but subsequently elects to be treated as an S corporation, required to redeem
the preferred stock? ................................................................................................................................. 20
5.7 When is a loan or line of credit accounted for in the calculation of the dividend or interest rate
reduction calculation? How much credit for qualified lending will an issuer receive for sold loan
participations or sold loans?.................................................................................................................... 20
6. Other Information ............................................................................................................................ 21
6.1 How can I contact Treasury to ask questions regarding the ECIP or to ask to receive updates
regarding the ECIP? ................................................................................................................................ 21
6.2 Where can I find more information on ECIP? ............................................................................ 21
6.3 Will PPP loans be included in the baseline for purposes of calculating an ECIP participant’s
increase in qualified lending or deep impact lending? ............................................................................ 21
6.4 How is deep impact lending taken into account in calculating an ECIP participant’s baseline
qualified lending or deep impact lending? .............................................................................................. 21

1. Eligibility
1.1 What types of institutions are eligible to participate in the ECIP?

To be eligible for the ECIP, an institution must be either a certified community development
financial institution (CDFI) or a minority depository institution (MDI). In addition, every eligible
institution must be:
• a federally insured depository institution that is not controlled by a bank holding
company (BHC) or savings and loan holding company (SLHC) that is also eligible for the
ECIP;
• a BHC;
• an SLHC; or
• a federally insured credit union.

Financial institutions that are not banking institutions and depository institutions that are not
federally insured are not eligible to participate in the ECIP. For example, the following types of
financial institutions are ineligible: CDFIs that are not banking institutions; cooperativas based
in Puerto Rico; and privately insured credit unions.

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1.2 Is any credit union that has a low-income designation eligible to participate in the
ECIP?

To be eligible to participate in the ECIP, a credit union must be federally insured and must be
either a CDFI or an MDI. Therefore, a credit union that has a low-income designation, is
federally insured, and is either a CDFI or an MDI may be eligible to participate in the ECIP.

1.3 What are the criteria to be an MDI for purposes of participation in the ECIP?

An MDI is an institution that is any of the following:

• A “minority depository institution,” as defined in section 308 of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 1463 note). A depository
institution satisfies this definition if it is (1) a privately owned institution, 51 percent of
which is owned by one or more socially and economically disadvantaged individuals; (2)
a publicly owned institution, 51 percent of the stock of which is owned by one or more
socially and economically disadvantaged individuals; or (3) a mutual institution of which
the majority of the board of directors, account holders, and the community which it
services is predominantly minority (defined by statute as Black American, Native
American, Hispanic American, or Asian American).
• An institution considered to be an MDI by the Office of the Comptroller of the Currency
(OCC), the Federal Deposit Insurance Corporation (FDIC), the Board of Governors of the
Federal Reserve System (Federal Reserve), or the National Credit Union Administration
(NCUA), as applicable.
• An institution listed in the FDIC’s MDIs List published for the third quarter of 2020,
available at https://www.fdic.gov/regulations/resources/minority/2020q3.xlsx.

Institutions that are listed in the FDIC’s MDIs List published for the fourth quarter of 2020, 2 or
credit unions listed on the NCUA’s list of MDIs for the fourth quarter of 2020, 3 are considered to
be MDIs by those agencies and are therefore eligible to participate in the ECIP.

1.4 Is a de novo bank or credit union eligible to participate in the ECIP?

A bank or credit union’s de novo status does not impact its eligibility for the ECIP, provided the
institution meets all the eligibility requirements of the ECIP. De novo financial institutions must
have sufficient historical financial data to complete the ECIP application and emergency
investment lending plan, which, among other information, requires lending data for the past two
fiscal years (see Question 3.3).

2
See https://www.fdic.gov/regulations/resources/minority/2020q4.xlsx.
3
See https://www.ncua.gov/support-services/credit-union-resources-expansion/resources/minority-depository-
institution-preservation/mdi.

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1.5 Is a BHC or SLHC that has not yet been certified as a CDFI or designated as an
MDI eligible to participate in the ECIP?

If a BHC or SLHC is not a CDFI or designated as an MDI, it is ineligible to participate in the
ECIP. However, if an ineligible BHC or SLHC has a subsidiary depository institution that is a
CDFI or designated as an MDI and that is FDIC insured, that subsidiary is eligible to participate
in the ECIP.

1.6 Can more than one affiliate of a BHC or SLHC separately apply to the ECIP?

If a BHC or SLHC is eligible to participate in the ECIP, no insured depository institution that is
controlled by that BHC or SLHC is eligible. However, if a BHC or SLHC is ineligible to
participate in the ECIP, each insured depository institution that it controls may be eligible and
may apply separately.

1.7 As of what date must an ECIP applicant be a CDFI or MDI to be eligible to
participate in the ECIP?

An institution relying on CDFI status for eligibility must (1) be certified by Treasury’s
Community Development Financial Institutions Fund (CDFI Fund) as of the date the institution’s
ECIP application is submitted and (2) must have submitted its application for CDFI certification
no later than March 31, 2021. Any institution that submitted an application for CDFI certification
after March 31, 2021, will not be considered.

An institution relying on MDI status must have such designation as of the date it submits its
ECIP application.

If an institution ceases to be a CDFI or an MDI after it submits its ECIP application but before
Treasury acquires preferred stock or subordinated debt from the institution under the ECIP,
Treasury may determine, in its discretion, that the institution is no longer eligible to participate in
the ECIP.

1.8 May an institution that is designated in Troubled Condition by its federal regulator
obtain a waiver from its primary federal regulator allowing it to participate in the
ECIP? Similarly, if an institution is currently designated in Troubled Condition but
may have the designation removed soon, is the institution eligible for the ECIP?

No. All institutions that are designated in Troubled Condition by the appropriate federal banking
agency or the National Credit Union Administration, as applicable, at the time of application are
ineligible to participate in the ECIP.

1.9 If an institution is subject to a formal enforcement action arising solely from Bank
Secrecy Act program deficiencies, is the institution eligible for the ECIP?

An institution is ineligible to participate in the ECIP if it is subject to a formal enforcement

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action with its primary federal regulator that addresses unsafe or unsound lending practices at the
time of application, or if it becomes subject to such an enforcement action after submitting an
application but before receiving an ECIP investment. However, an institution’s eligibility to
participate in the ECIP will not be affected by a formal enforcement action that does not address
unsafe or unsound lending practices, such as an action that solely addresses Bank Secrecy Act
program deficiencies.

1.10 How should an institution determine which of its affiliates should be listed as the
ECIP applicant on the program application?

As described in FAQ 1.1, to be eligible for the ECIP, an institution must be either a CDFI or an
MDI. In addition, every eligible institution must be (1) a federally insured depository institution
that is not controlled by a BHC or SLHC that is also eligible for the ECIP; (2) a BHC; (3) an
SLHC; or (4) a federally insured credit union.

A federally insured depository institution (IDI) may apply to the ECIP if it meets the eligibility
criteria and is not controlled by a BHC or SLHC that is also eligible for the ECIP. If the IDI’s
BHC or SLHC is a CDFI or MDI and is therefore eligible for the ECIP, then the BHC or SLHC
(not the IDI) should apply to the ECIP. Note that a BHC or SLHC is eligible for the ECIP only
if it is a CDFI or MDI at the time of its application to the ECIP; a pending CDFI certification
does not qualify an institution for the ECIP.

For an IDI that is otherwise eligible for the ECIP (including that it is a CDFI or MDI and is not
designated in Troubled Condition by its primary federal regulator or subject to a formal
enforcement action that addresses unsafe or unsound lending practices) and that is controlled by
a BHC or SLHC, the following steps can be used to determine whether the IDI, or its BHC or
SLHC, should apply to the ECIP:

a) Is the BHC or SLHC designated in Troubled Condition or subject to a formal
enforcement action that addresses unsafe or unsound lending practices?
• If yes: The BHC or SLHC is ineligible for the ECIP; the IDI may apply unless it
is also designated in Troubled Condition or subject to a formal enforcement action
that addresses unsafe or unsound lending practices.
• If no: Continue to (b)
b) Is the BHC or SLHC a CDFI?
• If yes: The BHC or SLHC is the appropriate ECIP applicant; the IDI should not
apply.
• If no: Continue to (c)
c) Is an IDI subsidiary of the BHC or SLHC considered to be an MDI by the IDI’s primary
federal regulator?
• If yes: The institution may elect for either its BHC or SLHC, or its IDI, to apply.
• If no: The BHC or SLHC is ineligible for the ECIP; the IDI may apply.

Treasury will consult the appropriate federal banking agency to confirm that the agency
considers a financial institution to be an MDI.

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1.11 The CDFI Fund places limits on which programs CDFI institutions or their holding
companies can apply to in the same year. Do these rules apply to the ECIP?

No. CDFI Fund rules that limit which programs CDFIs and their holding companies can apply
to in the same year do not apply to the ECIP, because the ECIP is not administered by the CDFI
Fund.

1.12 If a CDFI has a compliance issue with a prior CDFI Fund award or is in a CDFI
Fund certification or program cure period, does it affect ECIP eligibility?

Treasury will consider an ECIP application submitted by an applicant that has pending
noncompliance issues with the CDFI Fund if the CDFI Fund has not yet made a final compliance
determination. If a certified CDFI loses its certification at any point before the ECIP investment
determination, the application will no longer be considered by Treasury. An applicant on the
federal government’s Do Not Pay list may also submit an application but will not be eligible for
the ECIP if it is on the list at the time Treasury makes its investment determination.

2. Application and Emergency Investment Lending Plan
2.1 How do I submit an ECIP application and emergency investment lending plan?

All applicants for the ECIP must submit an application and emergency investment lending plan
through the ECIP application portal, available at https://home.treasury.gov/policy-
issues/cares/emergency-capital-investment-program.

2.2 The ECIP application requires applicants to submit an Incumbency Certificate; what
is the certificate required to state?

An Incumbency Certificate should (1) list the names of the applicant’s chief executive and chief
financial officers who certified the applicant’s ECIP application; (2) certify that such officers are
authorized to enter into binding commitments and transactions with Treasury with respect to the
ECIP; and (3) be signed by the certifying officers and corporate secretary (or person fulfilling a
similar function) of the applicant.

2.3 Will Treasury provide an applicant’s primary federal financial regulator with a copy
of the applicant’s Emergency Investment Lending Plan that is submitted together
with the ECIP application?

Yes. Treasury will share the Emergency Investment Lending Plan with the OCC, FDIC, Federal
Reserve, or NCUA, as applicable, and consult with them, as required by statute, to determine
whether the institution may receive an investment in the ECIP. However, determinations
regarding whether to approve an institution to participate in the ECIP will be made by Treasury.

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2.4 For purposes of the ECIP application and the Emergency Investment Lending Plan,
what does “fiscal year” mean?

References to “fiscal year” in the ECIP application and in the Emergency Investment Lending
Plan mean the fiscal year used by the applicant for financial reporting purposes.

2.5 Is an institution eligible to participate in the ECIP if its Emergency Investment
Lending Plan does not definitively prove that at least 30 percent of the institution’s
lending over the past two fiscal years, both by total number and dollar amount, was
made directly to low- and moderate-income (LMI) borrowers (as defined in the
ECIP application), to borrowers that create direct benefits for LMI populations, to
Other Targeted Populations (as defined in the application form), or to any
combination thereof?

ECIP applicants are statutorily required to submit, with their application, a lending plan that
“demonstrates that not less than 30 percent of the lending of the applicant over the past 2 fiscal
years was made directly to [LMI] borrowers, to borrowers that create direct benefits for [LMI]
populations, to other targeted populations as defined by the [CDFI] Fund, or any combination
thereof, as measured by the total number and dollar amount of loans.” This information is
important to promote Treasury’s ability to assess an applicant’s record of meeting the needs of
LMI and minority borrowers. An applicant that does not complete and submit the Emergency
Investment Lending Plan together with its application will not be considered for participation in
the ECIP.

An applicant should use all feasible efforts to collect and report definitive evidence that it meets
this 30 percent threshold, as requested by Question 1(a) of the Emergency Investment Lending
Plan. In the event that an applicant is unable to provide the requested data, the applicant must, in
Question 1(c) of the Emergency Investment Lending Plan, describe in detail why the data is
unavailable or would be unduly burdensome to collect. In those cases, the applicant may
complete Question 1(a) of its Emergency Investment Lending Plan by applying one of the two
methodologies described below to reasonably estimate the number and amount of loans to LMI
and minority borrowers; however, as noted in Question 3.1 below, the use of these
methodologies may result in a less favorable rating of the Emergency Lending Plan, which could
in turn result in a reduction in the amount of the investment an applicant is eligible for under the
ECIP.

The first methodology is to use data or information that indicates a reasonable probability
regarding the LMI or minority status of the borrower or beneficiary. Some examples include:

• If the applicant does not have data about minority status of a borrower, the applicant may
apply reasonable methods to use borrower addresses as a proxy for minority status, based
on available data regarding minority populations. For example, if the borrower’s address
is in a census tract that is majority minority, the applicant may, if applicable, include such
borrower’s loan in row 5 of Question 1(a) of the Emergency Investment Lending Plan
(“Applicant’s lending made to borrowers in census tracts that are majority Other Targeted

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Populations not already included 2, 3, and 4”).
• If the applicant does not have data on the income of a sole proprietor, the applicant may
reasonably estimate such income based on the sole proprietor’s revenue or net income.

The second methodology is for the applicant to use documentation submitted by it to the CDFI
Fund in connection with its CDFI certification or CDFI awards as a proxy for LMI or minority
borrower status. Documentation in connection with CDFI certification should include the
applicant’s annual certification reports for the previous two years; documentation in connection
with CDFI awards should include the applicant’s transaction level reports for the previous two
years.

If an applicant has data about the characteristics of some borrowers but applies one of the two
alternative methodologies described above with respect to other borrowers, the applicant should
complete Questions 1(a) and 1(c) in the Emergency Investment Lending Plan.

2.6 For purposes of Question 1(a) in the Emergency Investment Lending Plan, what are
the standards for determining whether loans are to borrowers or projects that “create
direct benefits for LMI populations?”

Question 1(a) of the Emergency Investment Lending Plan requests information on an applicant’s
total loans and lending in the following categories:

• Applicant’s total loans
• Applicant’s lending made directly to LMI borrowers
• Applicant’s lending made directly to “Other Targeted Populations” not already included
above
• Applicant’s lending made to borrowers or projects that create direct benefits for LMI
populations not already included above
• Applicant’s lending made to borrowers in census tracts that are majority “Other Targeted
Populations” not already included above

Question (1)(a) is designed to identify each loan made by an applicant that falls within one of the
four specific lending categories listed above. No loan should be reported in more than one
lending category; each loan should be included in the table only once.

An applicant should report on row 4 of Question 1(a) of the Emergency Investment Lending Plan
“lending made to borrowers or projects that create direct benefits for LMI populations.”

Footnote 3 in the Emergency Investment Lending Plan states that “borrowers that create direct
benefits for LMI populations” refers to borrower financing that is underwritten on the basis of
primarily serving low-income households; applicants may also report on row 4 of Question 1(a)
borrower financing that is underwritten on the basis of primarily serving moderate-income
households. A loan falls within this category if (1) more than 50% of the beneficiaries of the
financing are LMI individuals or (2) the financing was made with an express, bona fide intent to
serve LMI individuals as beneficiaries, the activity was structured to achieve this purpose, and

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the activity accomplishes or is reasonably designed to accomplish the purpose. Beneficiaries
mean occupants of housing units or commercial tenants in a real estate financing; employees of a
business; and board members, staff, clients, or customers in a nonprofit financing. For lending in
which less than 50% of the beneficiaries are LMI individuals, applicants may include the pro rata
portion of the financing attributable to LMI individuals.

2.7 For purposes of rows 2 and 3 in Question 1(a) in the Emergency Investment
Lending Plan, are loans to businesses majority owned by LMI individuals or by
Other Targeted Populations considered “lending made directly to” LMI borrowers
or Other Targeted Populations?

Yes, loans to businesses that are majority owned by LMI individuals should be counted in row 2
of Question 1(a) of the Emergency Investment Lending Plan as loans made “directly to LMI
borrowers.” Similarly, loans made to businesses that are majority owned by individuals who are
in Other Targeted Populations should be counted in row 3 of Question 1 of the Emergency
Investment Lending Plan as loans made “directly to Other Targeted Populations.”

2.8 For purposes of Question 1 in the Emergency Investment Lending Plan, may an
applicant include loans originated under the Small Business Administration’s
Paycheck Protection Program (PPP)?

A borrower may elect whether to include the loans it originated under the PPP for purposes of
Question 1 in the Emergency Lending Investment Plan. If a borrower includes any PPP loans for
this purpose, it must include all PPP loans it made.

2.9 For Purposes of Question 1(a) rows 3 and 5 in the Emergency Investment Lending
Plan, may an applicant include all lending made in “investment areas,” as defined in
CDFI regulations (12 CFR 1805.201(b)(3)(ii)), as lending made directly to “Other
Targeted Populations”?

No. The Application Instructions for Emergency Capital Investment Program define “Other
Targeted Population” based on the characteristics of the borrower, not the borrower’s location.
This approach to defining “Other Targeted Population” is consistent with the CDFI Fund’s
definition of this term, which currently includes the following: Black Americans, Hispanics,
Native Americans, Native Alaskans residing in Alaska, Native Hawaiians residing in Hawaii,
and Other Pacific Islanders residing in Other Pacific Islands. 4

2.10 Can the applicant’s chief executive officer or chief financial officer delegate the
authority to sign the ECIP application?

No. The applicant’s chief executive officer and chief financial officer (or one of these officers
and another authorized representative who performs a similar function) are responsible for
making the certifications and signing the application.
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Asian Americans are considered an Other Targeted Population for a CDFI if the CDFI Fund has previously made
such a determination for that CDFI.

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2.11 The ECIP application asks whether an applicant may issue preferred stock to
Treasury. Should an applicant reply “yes” even if it must obtain shareholder
approval to issue preferred stock?

Yes.

2.12 How should an applicant report total assets on the ECIP application?

The total assets reported is based on the applicant’s most recently filed Call Report (for an IDI or
federally insured credit union) or Form FR Y-9 (for a BHC or SLHC).

A BHC or SLHC applicant that reports total consolidated assets on Form FR Y-9 should report
in application Question 10 its total consolidated assets and separately report in application
Question 11 the total assets of each of its IDI subsidiaries.

A BHC or SLHC that does not report total consolidated assets on Form FR Y-9 should report in
application Question 10 only the total assets of its parent company and separately report in
application Question 11 the total assets of each of its IDI subsidiaries.

2.13 The Emergency Investment Lending Plan instructions state that “the Applicant must
provide documentation that supports its responses to questions 1 through 4 of the
Emergency Investment Lending Plan.” What types of documentation are required,
and how should they be submitted?

Supporting documentation might include Call Report data, Forms FR Y-9, other financial report
data, internal loan file data, or other information. This documentation may be uploaded in pdf
format in the upload fields in the application. If an applicant provides internal loan data, it
should only provide aggregate information, not individual loan data that might include
personally identifiable information.

2.14 Question 1(a) in the Emergency Investment Lending Plan requires data for Fiscal
Years 2019 and 2020. May an applicant elect to report activity for calendar years
2019 and 2020 instead?

No. All applicants must provide data for the specified fiscal years.

2.15 Row 5 in Question 1(a) of the Emergency Investment Lending Plan requires
applicants to specify their lending made to borrowers in census tracts that are
“majority Other Targeted Populations” not reported in rows 2, 3, and 4 of the table.
How should this amount be calculated?

The statue requires each applicant to demonstrate that not less than 30 percent of its lending over
the past two fiscal years was made directly to low- and moderate income borrowers, to borrowers
that create direct benefits for low- and moderate-income populations, to other targeted

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populations as defined by the CDFI Fund, or any combination thereof, as measured by the total
number and dollar amount of loans. Applicants should use all feasible efforts to collect and
report definitive evidence that they meet the 30 percent threshold. If an applicant does not have
data about the minority status of a borrower required by rows 2, 3, and 4 in Question 1(a), the
applicant may report in row 5 loans to borrowers in majority-minority census tracts as a proxy
for loans to minority borrowers. (Question 1(c) also provides applicants an alternative method to
demonstrate that they meet the 30 percent threshold, as described in FAQ 2.5.) However,
definitive data about the minority status of a borrower will receive a more favorable rating than a
proxy in Treasury’s underwriting and allocation process.

In the case of a real estate loan, an applicant could use this type of proxy if the borrower’s
residential address is in a majority-minority census tract or if the business that owns the real
estate is majority owned by individuals who have a residential address in a majority-minority
census tract. The address of the real estate would not be considered.

2.16 Question 2 of the Emergency Investment Lending Plan requires examples of certain
types of business activities. What types of examples are most helpful?

The ECIP Rate Reduction Incentive Guidelines, which are available on the Treasury website,
provide illustrative examples.

2.17 Questions 2, 3, and 4 of the Emergency Investment Lending Plan refer to various
target populations, such as “communities that may be disproportionately impacted
by the economic effects of COVID-19” and “low-income and underserved
communities, including persistent poverty counties, that may be disproportionately
impacted by the economic effects of COVID-19.” Are these differences
intentional?

Yes. These questions refer to different groups because they are for different purposes.
Applicants should provide the information and data requested by each item.

2.18 In Question 3(b) of the Emergency Investment Lending Plan, what is the meaning of
“LMI Minority communities”?

LMI Minority communities are census tracts that are both (1) majority LMI individuals and (2)
Minority Communities (as such terms are defined in the ECIP application instructions).

2.19 If the applicant is a BHC or SLHC that does not report lending, what lending
information should it report in its Emergency Investment Lending Plan?

Eligible BHCs and SLHCs that do not report lending at the holding-company level should report
in their Emergency Investment Lending Plan the aggregate lending activities of their subsidiary
IDIs.

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2.20 Is it acceptable for the primary contact listed in the ECIP application to be a third
party?

Yes. A third party acting on behalf of the applicant may be listed as the primary contact in the
ECIP application.

2.21 The chief executive officer and chief financial officer certifications in the ECIP
application require the submission of the applicant’s most recent fiscal-year-end
audited financial statements. How should those financial statements be attached?

The applicant should upload the requested financial statements on the “Certification and
Submission” page under the item for attaching “information not provided elsewhere in this
application.”

3. Investment Decisions
3.1 How will Treasury decide how to allocate the available capital among applicants
that meet the thresholds for eligibility?

To determine investment amounts for eligible applicants, Treasury will use information
submitted in ECIP applications (including in Emergency Investment Lending Plans) and
information made available to Treasury by applicants’ regulators to assess three key factors: (1)
the suitability of the requested investment amount; (2) the applicant’s capacity to implement the
operating goals in its Emergency Investment Lending Plan; and (3) the applicant’s
responsiveness to community needs. Treasury may verify the information provided by applicants
using publicly available information or information provided by regulators and may make
investment decisions based on the data and information available to it.

Information relevant to the assessment of the suitability of the requested investment amount will
include the applicant’s capital, asset quality, management, earnings, and liquidity, together with
comparisons to the applicant’s CDFI or MDI peer group. In addition, Treasury will assess an
applicant’s viability as a going concern and its expected ability to pay dividends and interest in
the amounts contemplated by the terms of the preferred stock or subordinated debt to be issued
by the applicant under the ECIP.

To evaluate an applicant’s capacity to implement the operating goals in its Emergency
Investment Lending Plan, Treasury will assess the applicant’s responses in all four parts of the
Emergency Investment Lending Plan. This may include information about the applicant’s
internal capacity (such as staffing levels and networks), reasonable projections based on the size
of the market, and track record of lending and investing in targeted communities identified in the
Emergency Investment Lending Plan. An applicant’s ability to provide precise and robust data to
demonstrate that it satisfies or exceeds the 30 percent threshold described in question 2.5 above
will also indicate the applicant’s capacity to invest in the target markets.

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Treasury’s evaluation of an applicant’s responsiveness to community needs will involve an
assessment of how well the applicant has tailored its Emergency Investment Lending Plan to
historical and future community needs, especially those needs that have arisen as a result of the
COVID-19 pandemic. An applicant should provide quantitative and qualitative data in the
Emergency Investment Lending Plan that demonstrates how its lending will provide access to
capital to address community needs and opportunities, including in response to the impacts of the
COVID-19 pandemic, and any previous or proposed consultations or partnerships in targeted
communities to identify community needs. Each applicant should include available
documentation supporting this information with its application. For example, applicants are
encouraged to submit community benefits agreements or other evidence of partnerships or
meaningful engagement (past and present) with organizations, businesses, and individuals that
work to benefit or strengthen minority, LMI, or rural communities. In addition, if applicable,
information showing an applicant’s responsiveness to community needs may include the extent
to which the applicant has made loans that qualify as “deep impact lending” under the ECIP, as
described at https://home.treasury.gov/system/files/136/Rate-Reduction-Incentive-
Guidelines.pdf. An applicant’s ability to provide loan data that aligns with the deep impact
lending metrics will be viewed as a strong indication of capacity.

In addition to these three factors, Treasury may also take applicants’ locations, target markets,
and sizes into account to determine the final investment amount. Treasury will review the list of
potential investment recipients to determine whether the pool of recipients collectively meets the
following objectives:

• potential recipients’ proposed target markets represent broad geographic and coverage
throughout the United States, including urban and rural areas;
• potential recipients demonstrate the capacity to invest in a diversity of Other Targeted
Populations;
• the distribution of investments under the ECIP are consistent with statutory asset-based
set-asides for ECIP participants.

Treasury may modify investment amounts or the potential recipient pool if necessary or
appropriate to achieve these objectives. Further, Treasury may modify the amounts of potential
ECIP investments in order to comply with statutory asset-based set-asides for ECIP participants.
If appropriate to accomplish the objectives listed above, Treasury may also determine initially to
invest only a portion of the total available amount of funding available under the ECIP and to
make additional funding available under a separate application round at a later date.

3.2 When will Treasury begin making investment decisions?

Treasury currently expects to begin approving ECIP applications beginning in Fall 2021.

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3.3 Is an applicant required to request the statutory maximum investment amount based
on the institution’s asset size, or can it request a smaller investment?

Applicants are not required to request the maximum investment amount set forth in the statute.
Each applicant may determine the amount of ECIP investment to request, up to the statutory
maximum.

3.4 Could an applicant be approved for less than the full amount of ECIP investment for
which it applies?

Yes. In determining the investment amount for any ECIP applicant, Treasury may take into
account the information provided by the applicant in its Emergency Investment Lending Plan, as
well as publicly available information. In addition, Treasury may approve an applicant for less
than the full amount it requests if the applicant does not meet the minimum dividend or interest
coverage ratio of 1 to 1, in order to comply with statutory asset-based set-asides for ECIP
participants, or if the program is oversubscribed.

3.5 What is the role of the bank regulatory agencies in reviewing ECIP applications?

The federal banking regulators, including the NCUA, will review ECIP applications and provide
information to Treasury about the financial condition of the applicants. The agencies will also
notify Treasury if an applicant is in Troubled Condition or subject to an enforcement action that
addresses unsafe and unsound lending practices. However, all ECIP investment decisions will
be made by Treasury. Treasury may also use publicly available data, including regulatory
filings, in its review.

3.6 How does an applicant’s dividend or interest coverage ratio affect Treasury’s review
of an application?

The dividend or interest coverage ratio, measured as the ratio of an applicant’s available cash
flow to the amount of dividends or interest the applicant would pay under the ECIP, reflects an
applicant’s capacity to pay the dividends or interest. An applicant must have a minimum ratio of
1 to 1. For this purpose, the available cash flow will be determined based on the applicant’s
historical profitability and information in its Emergency Investment Lending Plan. Applicants
should explain in the “Business Strategy and Operating Goals” and “Growth Strategy” sections
of the Emergency Investment Lending Plan how they intend to make the dividend and interest
payments. If an applicant’s ratio would otherwise be less than 1 to 1, the ECIP investment
amount will be decreased to an amount that results in the ratio being 1 to 1.

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4. Terms of Preferred Stock and Subordinated Debt
4.1 Can an institution choose whether to issue preferred stock or subordinated debt in
the ECIP?

No. In general, institutions will issue preferred stock to Treasury in the ECIP. However, if
Treasury determines that an institution cannot feasibly issue preferred stock, the institution may
instead issue subordinated debt to Treasury in the ECIP. For example, mutual institutions,
subchapter S corporations, and federally insured credit unions generally cannot issue preferred
stock and may apply to issue a subordinated debt instrument in the ECIP.

4.2 What are the terms for the preferred stock and subordinated debt to be issued by
institutions participating in the ECIP?

Preliminary term sheets and other materials relating to the terms of the preferred stock and
subordinated debt to be issued in the ECIP are available at https://home.treasury.gov/policy-
issues/cares/emergency-capital-investment-program.

4.3 What are the dividend or interest rates for preferred stock and subordinated debt
issued in the ECIP?

The dividend and interest rates for preferred stock and subordinated debt are described in the
financial instrument term sheets, available at https://home.treasury.gov/policy-
issues/cares/emergency-capital-investment-program.

The dividend or interest rate may be reduced if a participating institution achieves certain levels
of qualified lending. Further dividend or interest rate reductions are available based on an
institution’s “deep impact lending,” which is a subset of qualified lending. Lists of the types of
lending that meet the standards for qualified lending and deep impact lending are available at
https://home.treasury.gov/system/files/136/Rate-Reduction-Incentive-Guidelines.pdf. Additional
guidance on qualified lending and deep impact lending will be published as it becomes available.

4.4 Are ECIP participants allowed to declare and pay dividends?

An ECIP participant that is current on its payment obligations to Treasury may declare dividends
or capital distributions consistent with Treasury’s interim final rule, Restrictions on Executive
Compensation, Share Buybacks, and Dividends (86 Fed. Reg. 13449 (March 9, 2021)) (or any
successor thereto), and any requirements established by its federal and state regulators.

4.5 If an ECIP participant achieves a dividend or interest rate in a year of 0.5 percent
based on an increase in qualified lending, will that rate remain unchanged in
subsequent years, or could it increase?

The dividend or interest rate is reset each year based on the ECIP participant’s amount of
qualified lending or deep impact lending during the previous year. The dividend or interest rate

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on an ECIP participant’s preferred stock or subordinated debt may increase or decrease in each
of years 3 through 10 after the instrument is issued. Dividends and interest do not accrue and are
not payable during the first two years after the instrument is issued.

4.6 What will be the dividend or interest rate on the preferred stock or subordinated debt
after the tenth anniversary of issuance?

After the initial ten-year period, the dividend or interest rate will become fixed, until maturity,
redemption, or repayment, at a rate determined by Treasury. The rate will be determined as of
the tenth anniversary of issuance of the preferred stock or subordinated debt based on the
average annual increase over the baseline in the ECIP participant’s aggregate amount of
qualified lending in the preceding nine years. The dividend or interest rate after the tenth year
will be: (i) 0.5 percent for an average annual increase greater than 400 percent; (ii) 1.25 percent
for an average annual increase between 200 percent and 400 percent; and (iii) 2 percent for an
average annual increase less than 200 percent.

4.7 What are the reference periods for Treasury’s determination of the dividend or
interest rate on preferred stock or subordinated debt? How will loans originated in
the first two years after issuance be taken into account in determining the amount of
qualified lending and deep impact lending?

Loans originated in the first year after issuance of the preferred stock or subordinated debt will
not be included in the calculation of dividend or interest rate reductions. Qualified lending or
deep impact lending during the second year after issuance will be used to calculate the dividend
or interest rate reduction for the third year after issuance. Qualified lending or deep impact
lending during each of the third through ninth years after issuance will be used to calculate the
dividend or interest rate reduction for the subsequent year. Qualified lending or deep impact
lending during the second through tenth years after issuance will be used to calculate the average
annual increase in qualified lending or deep impact lending over the baseline, which will be used
to fix the dividend or interest rate starting on the tenth anniversary after issuance of the preferred
stock or subordinated debt.

4.8 Do dividends or interest accrue during the first two years after the preferred stock or
subordinated debt?

No. Dividends or interest will not begin to accrue until the second anniversary of the ECIP
investment.

4.9 If a credit union has a longstanding practice of paying a patronage dividend, would
the credit union need approval from Treasury to continue paying the dividend?

Treasury’s interim final rule, Restrictions on Executive Compensation, Share Buybacks, and
Dividends (86 Fed. Reg. 13449 (March 9, 2021)), restricts “capital distributions,” which, for a
credit union, excludes payments of dividends and interest (as defined by 12 CFR 707.2(h) and

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(o) on accounts held by their members. This exclusion does not apply to any extraordinary or
special dividend.

4.10 How would borrower forbearance receive credit in qualified lending and deep
impact lending?

ECIP participants that provide forbearance for borrowers whose loans meet the definition of
qualified lending or deep impact lending can receive qualified lending or deep impact lending
credit in the year the payments are first paused. The amount of qualified lending or deep impact
lending will be equal to the aggregate amount of payments subject to the forbearance.

5. Compliance and Reporting
5.1 Are there additional requirements that apply to the ECIP?

As required by law, Treasury issued a rule to set restrictions on executive compensation, share
buybacks, and dividend payments for recipients of investments under the ECIP. Members of the
public may submit comments on the rule prior to the deadline by following the instructions set
forth in the rule, available at https://home.treasury.gov/system/files/136/ECIP-interim-final-
rule.pdf.

In addition, all participants in the ECIP will enter into certain agreements with Treasury that will
set forth additional requirements, such as compliance and reporting obligations.

5.2 What type of loan data will institutions be required to collect and report? Will
collection of customer demographic data be mandatory?

Reporting requirements will be set forth in the ECIP investment term sheets and investment
agreements. To qualify for a reduced dividend or interest rate, an ECIP participant will need to
report the information found in the ECIP Rate Reduction Incentive Guidelines, which are
available on the Treasury website.

5.3 How often will ECIP participants be required to submit reports to Treasury?

ECIP participants will generally report on lending on a quarterly basis.

5.4 Treasury’s interim final rule on executive compensation, share buybacks, and
dividends requires ECIP participants to adopt a policy on excessive or luxury
expenditures. How should institutions determine if they are in compliance with this
requirement?

Treasury’s interim final rule, Restrictions on Executive Compensation, Share Buybacks, and
Dividends (86 Fed. Reg. 13449 (March 9, 2021)), requires an ECIP participant to adopt and
maintain an “excessive or luxury expenditures policy” that sets forth written standards applicable
to the ECIP recipient and its employees that are reasonably designed to eliminate excessive and

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luxury expenditures, as described in the interim final rule. The definition in the rule of
“excessive or luxury expenditures” sets forth five categories of such expenditures. An ECIP
recipient may use existing policies relating to excessive or luxury expenditures to satisfy this
requirement in the interim final rule if the existing policies satisfy all of the rule’s requirements.
Treasury will not issue approvals of individual excessive or luxury expenditure policies.
However, ECIP participants must submit a copy of their policies to Treasury, as required under
the interim final rule.

5.5 May an ECIP applicant that is not currently an S corporation but intends to elect to
be treated as an S corporation for federal income tax purposes in 2021 or 2022 issue
subordinated debt to Treasury before making the election?

An institution can issue subordinated debt to Treasury under the ECIP only if Treasury
determines that the institution cannot feasibly issue preferred stock at the time of the investment.
An applicant that is not an S corporation before the time of Treasury’s investment and is not
subject to other existing limitations on its ability to issue preferred stock generally will not be
able to issue subordinated debt under the ECIP.

5.6 Is an ECIP participant that is not an S corporation at the time it issues preferred
stock to Treasury under the ECIP, but subsequently elects to be treated as an S
corporation, required to redeem the preferred stock?

An ECIP participant that first elects to be treated as an S corporation after issuing preferred stock
to Treasury under the ECIP will have the option to exchange the outstanding preferred stock for
subordinated debt. The maturity date of the subordinated debt instruments would be 30 years
after the date of the original preferred stock issuance, and the dates for compliance with
Treasury’s interim final rule would not change.

5.7 When is a loan or line of credit accounted for in the calculation of the dividend or
interest rate reduction calculation? How much credit for qualified lending will an
issuer receive for sold loan participations or sold loans?

Lending activity is attributable to qualified lending in the period in which it would first be
reportable in the Call Report or equivalent regulatory report. Qualified lending and deep impact
lending are based on loan originations, so an ECIP recipient will receive full credit for loans that
it originates except for the portion of any loan held by the ECIP recipient for which the risk is
assumed by a third party other than certain U.S. government entities, as described in the term
sheets for the preferred stock and subordinated debt. For example, the portion of loans that have
been participated are excluded from qualified lending. However, qualified lending and deep
impact lending are determined as of the date of the relevant reporting to Treasury, so an ECIP
participant is not required to restate its qualified lending if it sells a loan participation after the
origination of the underlying loan has been reported to Treasury.

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6. Other Information
6.1 How can I contact Treasury to ask questions regarding the ECIP or to ask to receive
updates regarding the ECIP?

For questions about the ECIP and to be informed about ECIP updates, please contact Treasury at
ECIPInquiries@treasury.gov.

6.2 Where can I find more information on ECIP?

Information regarding ECIP is available at https://home.treasury.gov/policy-
issues/cares/emergency-capital-investment-Program.

6.3 Will PPP loans be included in the baseline for purposes of calculating an ECIP
participant’s increase in qualified lending or deep impact lending?

PPP loans will not be included in the baseline for purposes of calculating an ECIP participant’s
increase in qualified lending or deep impact lending, because they were a one-time event that
may not reflect an ECIP participant’s typical activities. However, PPP loans may be included in
responses to Question 1(a) and (b) on the Emergency Investment Lending Plan to demonstrate an
applicant’s track record of lending to LMI and minority individuals.

6.4 How is deep impact lending taken into account in calculating an ECIP participant’s
baseline qualified lending or deep impact lending?

In establishing the baseline, both qualified lending and deep impact lending will be counted only
once. Deep impact lending will receive double credit only for purposes of calculating any annual
increases in lending under the ECIP Rate Reduction Incentive Guidelines.

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