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On Friday, NAFCU and  Inclusiv sent a joint letter in response to the Treasury Department’s notice and request for information regarding the State Small Business Credit Initiative (SSBCI).  The comment letter addresses the set aside for business enterprises that are owned and operated by socially and economically disadvantaged individuals; however, the SSBCI program is available for all insured credit unions. Both NAFCU and Inclusiv represent credit unions that are community development financial institution (CDFI) certified, low income designated, and minority deposit institution (MDI) certified.

In the letter, the two organizations point out the support and concerns of the SSBCI program. “While our organizations are supportive of inclusion of the SSBCI program as part of the overall American Rescue Plan Act of 2021 (ARPA), we have concerns about the wide latitude the statue affords to states in the development and execution of this important program,” wrote NAFCU and Inclusiv. “In certain states, a very real possibility exists that low-income communities and the capital needs of businesses owned by people of color will not be prioritized.”

The joint letter urges the Treasury to support meaningful engagement with the CDFI and MDI sector across all states and recommends the following: 

• states should be required or strongly incentivized to work with CDFIs and MDIS with long records of serving very small businesses and economically distressed communities in the development and implementation of the SSBCI;
• through written guidance provided by the U.S. Treasury to states administering the SSBCI, highlight the unique capabilities of CDFIs / MDIs in meeting the statutory requirements of the program to meet the needs of disadvantaged businesses as lenders or administrators of the funds; and
• require robust data collection by all SSBCI lenders and public reporting on loans made by geography at the county level, including whether or not the county is a non-metro county or a county in which the majority of the population is represented by people of color.

In addition, the letter empathized that even as the pandemic and its effects subside, “the economic needs in communities served by CDFIs and MDIs will remain.”

“Any dollars deployed by CDFIs through the SSBCI that are repaid, should be allowed to stay with the institutions in exchange for a future commitment to deploy the dollars in economically distressed communities or to disadvantaged small businesses,” added the organizations.

Lastly, NAFCU and Inclusiv encouraged the Treasury to provide additional SSBCI guidance, FAQs, training, and engagement with NCUA to help raise awareness of the program.

NAFCU will continue to advocate for MDI and CDFI certified credit unions, as they play an integral role in providing resources to underserved, minority communities and populations.