Trump administration carves out $10B in small business relief fund for low-income communities
CDFIs have doled out at least 94,843 loans worth more than $7.1 billion, according to the data.
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The Trump administration will carve out at least $10 billion from a small business relief fund for private institutions that serve low-income communities.
The Small Business Administration, which administers the Paycheck Protection Program alongside the Treasury Department, announced Thursday it would ensure the money would be exclusively loaned by Community Development Financial Institutions (CDFIs).
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The move is intended to guarantee the forgivable loans reach traditionally underserved communities, the agencies said.
“CDFIs provide critically important capital and technical assistance to small businesses from rural, minority and other underserved communities, especially during this economically challenging time," SBA Administrator Jovita Carranza said in a statement.
Under the program, established at the end of March with the passage of the CARES Act, businesses with fewer than 500 workers can receive low-interest loans of up to $10 million. If at least 75 percent of the money goes toward maintaining payroll — including salary, health insurance, leave and severance pay — for eight weeks, the federal government will forgive it.
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The remaining 25 percent can be spent on operating costs like rent and utilities, but may not go toward mortgage principal or pre-payments. Money spent on non-qualifying expenses must be repaid at an annual rate of 1 percent within two years. No payments are required during the first six months.
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The second round of PPP funding began on April 27 after the initial tranche of $349 billion evaporated in just 13 days. As of Saturday, more than 4.42 million loans worth close to $511 billion had been distributed through the program. Congress allocated about $610 billion to the PPP, leaving roughly $100 billion left over in the fund.
CDFIs have doled out at least 94,843 loans worth more than $7.1 billion, according to the data.
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