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The House Financial Services Subcommittee on Consumer Protection and Financial Institutions held a virtual hearing yesterday to discuss inclusive lending during the coronavirus pandemic and the role community development financial institutions (CDFIs) and minority depository institutions (MDIs) play in supporting underserved communities and small businesses during this challenging time.

Panelists represented several banks and opportunity groups. Much of the discussion focused on the Small Business Administration’s (SBA) paycheck protection program (PPP) and the subcommittee’s suggestions on what needs to be changed to ensure that the program works for CDFIs and MDIs. Members and panelists alike agreed that the current 11-page forgiveness application is too complicated and needs to be simplified. Chairwoman Maxine Waters, D-Calif., also brought up the need for a “substantial compliance” standard for PPP reimbursement, meaning that lenders should not be penalized for small errors made during the application process.

Many subcommittee members also voiced support for the previous PPP funding set asides for CDFIs, expressed a need for further set asides and called for further transparency within the program. The SBA and Treasury Department recently announced they would set aside an additional $10 billion of the PPP's round 2 funding for CDFIs.

The HEROES Act, a $3 trillion stimulus bill recently passed by the House, makes several changes to the PPP and includes a notable additional $1 billion in emergency funding for the CDFI Fund that would help credit unions serve their members. NAFCU President and CEO Dan Berger voiced support for this measure in a letter to House leadership ahead of passage. During the hearing, panelists spoke in support of this funding and called for CDFI funding to be made available for technological improvement grants, as many CDFIs do not have the resources to keep pace with technological advancements in the marketplace.

Ahead of the hearing, NAFCU Vice President of Legislative Affairs Brad Thaler sent a letter to the subcommittee to voice support for the subcommittee’s efforts to strengthen CDFIs and MDIs.

In addition, Thaler reiterated NAFCU’s call to Congress to continue to set aside funds for the PPP, for community financial institutions, as well as to consider additional set asides for CDFIs and MDIs specifically.

NAFCU will continue working with lawmakers to address credit unions' concerns and provide more relief to the industry and will keep credit unions informed of the latest developments.