CDFI Loan Funds have shown incredible expediency and responsiveness in reacting to the pandemic. They placed a priority on speed of response in terms of adopting policies to help current borrowers, developing and launching new emergency lending products, and leveraging capital from other public and private sources to maximize impact. Many of these activities were started immediately, before most CDFI Loan Funds were able to participate in the PPP program. Notably, many CDFIs were quick to modify existing strategic and business plans to reflect new priorities in combatting the economic crisis. Below are two snapshots of CDFI Loan Funds:
In just four weeks, CDFI Loan Fund A originated $12MM in PPP loans (roughly equal to its regular annual lending), and, in total helped 779 small businesses secure $17.99MM in PPP funding in FY2020. The CDFI’s ability to provide small businesses with COVID-19 relief funding was fueled by the organization’s successful capital raising efforts in which it raised $41MM in capital to support the launch of its COVID-19 Relief and PPP loans. The average size of CDFI Loan Fund A’s PPP loans was $23,100, compared to the national average across the program of $107,000. Although the CDFI does not have comprehensive data, of the PPP borrowers it was able to collect impact data for, 36% are BIPOC business owners, 17% are low-income, and 39% are located in economically distressed communities.
CDFI Loan Fund B has experience in rapidly drawing together funds through previous emergency response programs following natural and manmade disasters. With this experience, CDFI Loan Fund B launched a new emergency response loan fund early in the days of the pandemic for clients facing discrimination and decreased business even before formal shutdowns. CDFI Loan Fund B has worked with a range of local and state level programs as well as private and philanthropic partners to raise additional funds and roll out new loan products to support small business reopening needs and longer-term recover response. CDFI Loan Fund B turned to FUND Consulting for assistance in reframing its strategic plan in order to adjust its short-term priorities while maintaining focus on longer-term goals.
CDFI Loan Funds are now well positioned to ramp up activities even more with the expectation of additional public programs.