Awards for Excellence 2020
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Community Development Finance Institutions (CDFIs) play a unique role in the US, but they were not included in the earliest Covid-19 stimulus packages. So it was vital that big banks helped them to reach those that needed loans the most.
For its work in supporting CDFIs, Bank of America is recognized by Euromoney for excellence in leadership in North America.
Financing projects and businesses in lower-income and minority communities across the country, CDFIs are able to combine grants and private-sector capital to make loans and serve communities that the leading main street banks do not.
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Dan Letendre, |
BofA is no stranger to CDFIs. It has the largest portfolio of financing to CDFIs in the country, using its deposits to help them on-lend. By the end of 2019 that portfolio had reached $1.6 billion, invested in some 255 CDFIs.
That relationship meant that when Covid-19 hit, and lockdown paralyzed small businesses around the country, the bank was aware of the role CDFIs could play in helping build resiliency in their communities.
“We see CDFIs as financial first responders,” says Dan Letendre, head of CDFI lending and investment at BofA.
More than a month before the US Treasury and the Small Business Administration acknowledged the important role of CDFIs by committing $10 billion to them through the Paycheck Protection Program (PPP), BofA had announced it would provide up to $250 million in capital to CDFIs by funding loans through the PPP, as well as providing up to $10 million in unrestricted philanthropic grants.
That enabled CDFIs to make loans, respond to their community needs and keep their doors open at a time of crisis.
Letendre says the $250 million is “not a ceiling but rather a floor”, as long as the PPP continues.
“Once this lockdown period ends, we will need to work with CDFIs on new innovative programmes. Our support will not stop.”
He points out that this crisis may provide the impetus for CDFIs to be finally recognized for the invaluable role they play. As of May 23, 2020, CDFIs had approved more than $7 billion in PPP loans.
