On-the-Record Press Call by Vice President Harris on Historic Investment in Financially Underserved Communities to Improve Access to Capital and Financial Services
THE VICE PRESIDENT: Thank you. And good afternoon, everyone. So it is good to be with everyone today to address a subject that is critical to our administration and to our nation, which is the strength of America’s small businesses, small-business owners, and outstanding entrepreneurs.
Small businesses are the backbone of our nation’s economy. Small businesses employ half of all American workers, and they make up more than 99 percent of all businesses in our country. Small-business owners and entrepreneurs are some of America’s greatest innovators. They are flexible and creative. They know how to turn a small budget into a big success.
And these leaders are not just essential to the strength of our economy, but to the strength of our communities. They are community leaders and civic leaders. They mentor young people and hire locally. They support the town softball team.
As District Attorney of San Francisco, Attorney General of California, United States Senator, and now Vice President, I have met and worked with small-business owners from practically every corner of our country. I have seen firsthand the tremendous impact of these leaders. And I have also seen the incredible challenges they face, in particular when it comes to access to capital.
Across our nation, there are entrepreneurs and small-business owners with big plans and a vision for the future — folks who want to build a brand, buy inventory, invest in online ads, and hire more workers, but who cannot because they simply don’t have access to the capital or financial services they need.
And we know that for some these challenges are even greater. Black entrepreneurs are three times more likely to report that they did not apply for a loan for fear of being turned away by a bank.
Despite making up 25 percent of new business owners, Latino entrepreneurs received less than 1 percent of funds from top venture capital and private equity firms.
For many Asian American business owners, in particular immigrant business owners, language barriers have a tendency to limit their ability to access capital and banking services.
And for folks who live in rural areas, including many Native Americans, there’s often a lack of access to traditional financial services of any kind.
So, for years, I’ve worked on this issue to address these disparities. As a United States senator, I teamed up with Leader Chuck Schumer, Senator Mark Warner, Senator Cory Booker, and Chairwoman Maxine Waters to invest $12 billion in community development financial institutions, also known as CDFIs.
These banks predominantly do business in overlooked and underserved communities. They know these communities. They understand these communities. And in particular, most importantly, they know and see the capacity of these communities.
And so, over the past two years, as a follow-up to that $12 billion that we brought in from the — from my days when I was in the Senate, over the past two years, we have distributed close to $10 billion of that $12 billion investment to community lenders across our nation.
And today, I’m proud to announce that we are distributing another $1.7 billion of those funds to 603 community lenders through the CDFI Equitable Recovery Program.
So, for example, in Louisiana, Liberty Financial Services part of Liberty Bank, one of the largest Black-owned financial institutions in our country, will receive $6 million.
In Pennsylvania, Community First Fund, which lends mostly to businesses owned by people color, will receive $6 million as well.
In California, PACE Finance Corporation, which lends to many Asian American-owned small businesses, will receive $2.4 million.
In Mississippi, BankPlus, which serves rural communities, will receive $2.4 million.
And in Puerto Rico, 70 lenders will receive about $226 million.
In all, this $1.7 billion investment represents the largest CDFI grant program in history. And because these grants are not loans, community lenders do not need to pay back not even a dollar of this investment.
It is also important to note that community lenders do so much more than support small businesses. They also provide home loans for families, financial services for local nonprofits, and capital for community organizations.
So, in conclusion, I’ll say, I think it — it just really comes down to this: When we invest in community lenders, we give people across our nation the opportunity to build a business, to buy a home, and to strengthen their community. And we help build a future where all people, no matter where they are or where they start, have the resources they need not only to succi- — to succeed, but to thrive.
So thank you for the time. I’m going to now turn it over to Deputy Secretary of the Treasury Wally Adeyemo.
Thank you, Wally.
DEPUTY SECRETARY ADEYEMO: Thank you, Madam Vice President, not only for joining this call, but for your leadership on this issue and on several issues — several issues related to equity.
We literally would not be here without the work that you did to design the path legislating creating — legislation creating the CDFI Equitable Recovery Program back when you were in the Senate. And we appreciate your leadership in the administration today in driving us to do as much as possible to make sure that we have an economy that works for everyone.
The Biden-Harris administration has taken decisive steps to address the economic impacts of the pandemic, as you all know. Our approach has resulted in a strong economic recovery, one that is focused particularly on communities that have been historically underserved.
Even as we tackle that crisis, we said that it was not enough to achieve an equitable recovery, but that we were committed to building a more equitable economy moving forward. And the CDFI Equitable Recovery Program grant funds will not only further this commitment, but will be transformative for these grantees that are doing the hard work of building a more equitable, resilient economy going forward.
The question of who can access credit and capital and who can’t is at the root of many long-term structural problems in our economy.
Today’s announcement represents a historic investment in expanding economic opportunity in low-income communities and creating pathways for more people to realize the American Dream. These critical resources will allow mission-driven lenders to expand responsible access to capital and services in financially underserved communities, allowing more Americans to fully participate and compete in the 21st century economy.
This program was intentionally designed to address the needs of communities that are financially underserved and were disproportionately impacted by the pandemic. For example, policy priorities for this grant program include providing financial products and services and borrower assistance to low- to moderate-income majority minority communities; minority borrowers and minority-owned and -controlled businesses that have significant unmet capital or financial service needs; small businesses with less than $1 million in annual gross revenues; or to small farms, with an emphasis on serving small businesses with less than $100,000 in annual revenue; persistent poverty counties; Native areas; and/or U.S. territories.
I want to particularly lift up that through the Equitable Recovery Program, we’re making significant investments in Native CDFIs, CDFIs in Puerto Rico, and CDFIs that serve minority-owned small businesses.
It’s also important to remember that these investments will also have a significant impact on rural communities. We, as a country, are missing out on so many avenues for growth because our capital is bottlenecked by race and region. This is why, even if you never apply for a loan from a community development financial institution, you should care about them — you should care deeply about them. Because in serving places the financial sector historically hasn’t served well, they lift our whole economy up.
With that, I want to thank the entire CDFI team that has made today’s announcement possible and all the champions in Congress who helped to get this done, especially Senator Warner and Congresswoman Waters and also Leader Schumer, Chairman Brown, and Senator Booker.
With that, thank you very much. And I’ll turn it back over to the operator.
OPERATOR: And we will go first to Caresse Jackman. Go ahead, please.
Q Yeah, thank you so much, Madam Vice President and Deputy Secretary.
My first question is — obviously, this is good news for so many minority-owned businesses and people trying to invest in and grow their businesses. How do you believe these new funds and investments will shrinken [sic] the wealth gap throughout our society? And also, how soon can minority communities receive the services?
SENIOR ADMINISTRATION OFFICIAL: This is [senior administration official] at Treasury. And just a couple of points in response.
First, with regard to the wealth gap, you know, building wealth is about purchasing a home. It’s about growing a business. And these institutions, the community development financial institutions, CDFIs, specialize in doing that in communities where access to capital is most difficult.
And so by bringing capital to those communities for these wealth-building activities, that’s this very precise strategy that is aimed at closing the racial — racial wealth gap.
OPERATOR: Thank you for your patience. We’ll go next to Akayla Gardner, please go ahead.
Q Hi, thanks for taking my question. I just wanted to follow up on the last question that was asked and see if you guys can clarify when the funding will be available. And we’ve seen a number of these announcements from the VP’s office and the Treasury’s office. I wonder if you could just speak broadly to how these, sort of, line up with both of your agendas.
SENIOR ADMINISTRATION OFFICIAL: So maybe I’ll — I’ll see if [senior administration official] wants to go first. And if she doesn’t, I’ll take the question.
But I think to speak broadly to — I’ll let [senior administration official] come in with the timing of when these resources will hit the bank accounts of these CDFIs.
But to speak more broadly about what we’re accomplishing here, fundamentally, the President and the Vice President’s agenda is about growing the economy from the middle out.
And one thing that we recognize here at the Treasury Department is that the real opportunity for growing the economy, for unlocking the potential of our economy is by investing in communities that have been left behind for too long. That’s where the most — most of the unrealized potential in the U.S. economy lies today.
And that’s why investments like the one we’re announcing today are so critical, because they allow us to get capital to communities like rural communities in America, Native communities in America, urban communities in America that have been starved for capital, in order to both create things like more affordable housing but also to make sure that money is getting to small businesses.
And to your point, you’re right that this is about — this is one of a number of different announcements that we’ve made over the course of the last two years that speak to our interest in investing in these communities, including not only the money that we’ve given to CDFIs, but the State Small Business Credit Initiative. Money that is going to helping to create an underlying economic ecosystem.
And we’ve seen that this has mattered. We’ve had record numbers of small businesses created America — in America, especially record numbers of small businesses created, or by Lat- — by Latin and Black business owners.
And when you looked at the unemployment figures that came out just days ago, you saw the lowest level of Black unemployment in history. And that was because of the investments like the ones that we’re announcing today, which are allowing us to invest in parts of the economy that have been underinvested in.
And we think that this isn’t only beneficial to these communities, but it’s beneficial to the broader economy in terms of making sure that we’re in a position where we can grow an economy that is both — that brings more people into the labor market to help us grow the economy going forward.
I’ll turn it over to [senior administration official] and [senior administration official] to talk a little bit about timing about this specific program.
SENIOR ADMINISTRATION OFFICIAL: Sure, so I’ll give the sort of technical answer and the practical answer.
The technical answer is that these are grants. Organizations will receive grant agreements. They’ll go through that process. And then the money will be transferred over the course — we’re talking about hundreds of organizations here, so over the course of the coming months, that — that whole process will be enacted.
The practical response is that when these institutions confirm they have a written letter from the Treasury Department, which they will receive a relatively immediately, they’re actually able to book that on their — in their financial and actually act with the confidence that they have those dollars.
And so, the truth is — is exactly when the dollars get transferred into a bank account is sort of not the big deal. The big deal is that they are able to book it on their balance sheet and communicate it to their communities. And that allows them to move forward relatively immediately with — with their impact.
And of course, these are all institutions that this is their business model. So they’re — they’re not sort of sitting on their hands waiting to take action. They’ve been taking action, and this will be catalytic for — for them in going further and serving the communities that they serve.
OPERATOR: Next, we will go to Alexander (Inaudible). Please go ahead.
Q Thank you. Can you hear me?
OPERATOR: Yes, we can hear you. Go ahead, please.
Q Okay, great. Thank you so much for doing this. I had a question in sort of looking at — looking at the announcement today in conjunction with some of the other CDFI measures that the administration has been — has been touting.
Going back to sort of the — sort of the tax credit aspect of it — and there’s been a lot of discussion around opportunity zones and how the sort of — how they’ve been, sort of, implemented has led to instead of sort of going to more underserved communities, it’s been going to communities that are already receiving investment and have already — and have already received investments from other means.
So I wanted to see: Are they — are sort of these tools that — that the administration is using in terms of — in terms of targeting sort of specific institutions that are minority-owned or in specific rural areas — do you see this as more as a more effective tool? Or is it just a complement to sort of a wider range of measures being taken?
SENIOR ADMINISTRATION OFFICIAL: What I would say is that these are very different tools than the opportunity zones in terms of — this is actually putting capital into the hands of financial institutions and creating real incentives for them to lend it to the people who need them most, especially people who live in persistent — persistent poverty areas of our country, be they rural or urban.
And what we’re — what we found, in terms of — to [senior administration official’s] point — is that institutions that have been doing this work for a long time — one of the things that they needed early on was they need more capital.
So, part of the money that we provided to these institutions has been in the form of capital. But, in addition to needing capital, many of these institutions also needed grants to be able to support things like improving their technology so that they would be in a position to do better lending and do better underwriting.
So what we’ve done here is that we’ve used the money that Congress provided, through leadership with the Vice President, to try and empower the ecosystem of lenders who are in these communities where we know that there is a great deal of unrealized potential, in the hopes that this money will then become the capital that will infuse the unlocking of that potential in a way that grows the economy.
So I would call this — I consider these tools, including the money we’re putting into CDFI’s minority-owned depository institutions and the Small Business Credit Initiative, to be very different tools than the opportunity zones.
But maybe, [senior administration official], you want to add something else?
SENIOR ADMINISTRATION OFFICIAL: I couldn’t have said it better. I — think I leave it at that. That’s — that’s exactly correct.
OPERATOR: We have no additional questions in queue.
SENIOR ADMINISTRATION OFFICIAL: Thank you.