April 16, 2024

CDFI Fund: $18 Million Awarded to Support Consumer Access to Financial Institutions Through the CDFI Small Dollar Loan Program Awards

Today, the U.S. Department of the Treasury’s Community Development Financial Institutions Fund (CDFI Fund) awarded $18 million in grants to Certified Community Development Financial Institutions (CDFIs) through the combined fiscal year (FY) 2023 and (FY) 2024 round of the Small Dollar Loan Program (SDL Program).

“These important awards enable more Certified CDFIs to offer alternatives to costly payday lenders. Notably, 32% of all award funds went to Certified CDFIs headquartered in persistent poverty counties, exceeding the statutory requirement by over threefold,” said CDFI Fund Director Pravina Raghavan. “With a quarter of unbanked or underbanked American households, our program aims to broaden access to affordable financial products and services. These awards significantly boost access to small dollar loans in underserved communities.”

The SDL Program helps Certified CDFIs address the need to expand consumer access to mainstream financial institutions and provide alternatives to high-cost small dollar loans. The program was also created to help unbanked and underbanked populations build credit, access affordable capital, and allow greater access to the mainstream financial system. Through the SDL Program, the CDFI Fund provides Loan Loss Reserves (LLR) awards to enable CDFIs to establish a loan loss reserve fund to defray the costs of establishing or maintaining a small dollar loan program and Technical Assistance (TA) awards to support technology, staffing, and other eligible activities to enable a CDFI to establish and maintain a small dollar loan program.

For the FY 2024 SDL Program funding round, a total of 66 Certified CDFIs received $18 million in awards. Of those CDFIs, 63 received $17.6 million for a combination of TA and LLR awards, two received $229,934 in TA awards, and one received $201,192 in an LLR award. The Award Recipients, demonstrating organizational diversity, include 29 credit unions that received $8.7 million; 21 loan funds that received $5.1 million; and 16 banks or bank holding companies that received $ 4.1 million. Eighteen Award Recipients are Minority Depository Institutions; they received awards totaling $5.1 million.

The 66 Award Recipients are headquartered in 25 states, the District of Columbia, and Puerto Rico. Twenty-two Award Recipients headquartered in Persistent Poverty Counties, received SDL Program awards totaling $5.8 million, or 32% of total funds awarded. This amount exceeds the Congressional mandate of 10%. Persistent Poverty Counties, per Congressional guidance, are those counties that have experienced poverty rates of at least 20% over the past 30 years as measured by the American Community Survey of the U.S. Census Bureau.

The FY 2024 SDL Program Award Book and the Application Evaluation Process Overview can be accessed below. For more information about the SDL Program, visit the CDFI Fund’s website at www.cdfifund.gov/sdlp.

Related Materials

This post was originally published here.