The U.S. Treasury Department awarded $401.8 million COVID-19 relief funds to 244 credit unions on Tuesday.
Vice President Kamala Harris and Treasury Secretary Janet L. Yellen announced the awards at the White House as part of $1.25 billion in COVID-19 relief funds to 863 community development financial institutions (CDFIs).
“In serving places that the financial sector historically hasn’t served well, CDFIs lift our whole economy up,” Yellen said. “We know that for every dollar injected into a CDFI, it catalyzes eight more dollars in private-sector investment, meaning that today’s announcement might lead to an additional $10 billion in investment.”
The grants will be made through Treasury’s CDFI Rapid Response Program designed to provide capital for CDFIs to respond to economic challenges created by the COVID-19 pandemic, particularly in underserved communities.
NAFCU issued a news release in which its president/CEO Dan Berger praised the awards. He said the trade group has pressed for additional CDFI funding so credit unions can better serve Americans in need of support.
“For every dollar the U.S. Treasury has awarded in new grant funding, there is a CDFI that will put each dollar to good use towards the economic recovery,” he said. “CDFI credit unions have always worked hard to help low-income and underserved communities gain access to financial services. During the pandemic, credit unions stepped up to the plate to ensure these communities had the financial resources needed to weather the pandemic.”
CDFI Fund Director Jodie Harris said the grants provide flexible capital to help distressed and underserved communities.
The grant funds will be used to support eligible activities such as financial products, financial services, development services and certain operational activities, and to enable CDFIs to build capital reserves and loan-loss reserves. The CDFI Fund designed the program to disburse the funds rapidly in light of the nationwide economic impacts of the COVID-19 pandemic.
“CDFI RRP awards will enable CDFIs to help businesses keep their doors open, help families make ends meet, and help maintain important community facilities during this difficult time,” Harris said.
The grants, ranging from $200,000 to $1.8 million, were made to CDFIs in 48 states, the District of Columbia, Guam and Puerto Rico. Besides credit unions, others receiving grants were:
- $571.3 million to 463 loan funds;
- $246.1 million to 137 banks and thrifts;
- $21 million to 12 bank holding companies; and
- $7.6 million to seven venture capital funds.