The U.S. Small Business Administration (SBA), in consultation with the Department of the Treasury (USDT), plans to allocate $10 billion of Round 2 funding for the Paycheck Protection Program (PPP) to exclusively support Community Development Financial Institutions (CDFIs), the SBA announced Thursday.
“The forgivable loan program, PPP, is dedicated to providing emergency capital to sustain our nation’s small businesses, the drivers of our economy, and retain their employees,” said SBA administrator Jovita Carranza. “CDFIs provide critically important capital and technical assistance to small businesses from rural, minority and other underserved communities, especially during this economically challenging time.”
CDFIs work to expand economic opportunity in low-income communities. The institutions will provide additional access to financial products and services for local residents and businesses through the added funds.
The funds will also further support communities in need of relief during the COVID-19 pandemic across all areas. CDFIs have approved more than $7 billion, including $3.2 billion in Round 2, in PPP loans as of May 23, 2020.
With the addition of $6.8 billion, CDFIs will enable entrepreneurs and small businesses across all communities to have easy access to the financial system. The funding will also ensure that these communities receive more capital to maintain their workforces.
“The PPP has helped over 50 million American workers stay connected to their jobs and over 4 million small businesses get much-needed relief,” said Treasury secretary Steven Mnuchin. “We have received bipartisan support for dedicating these funds for CDFIs to ensure that traditionally underserved communities have every opportunity to emerge from the pandemic stronger than before.”
The Paycheck Protection Program was created by the Coronavirus, Aid, Relief, and Economic Security Act (CARES Act) and has provided forgivable loans to small businesses affected by the COVID-19 pandemic to keep their employees on the payroll.
About the U.S. Small Business Administration
The U.S. Small Business Administration makes the American dream of business ownership a reality. As the only go-to resource and voice for small businesses backed by the strength of the federal government, the SBA empowers entrepreneurs and small business owners with the resources and support they need to start, grow or expand their businesses, or recover from a declared disaster. It delivers services through an extensive network of SBA field offices and partnerships with public and private organizations.