HYDE-SMITH BACKS BILL TO BOOST CAPITAL FOR UNDERSERVED SMALL BUSINESSES
Joins Hickenlooper, Braun & Warner on Bill to Establish Dedicated Office of Community Financial Institution at SBA
WASHINGTON, D.C. – U.S. Senator Cindy Hyde-Smith (R-Miss.) last week signed as a lead cosponsor of the Supporting Community Lenders Act, bipartisan legislation to expand credit access to underserved small business owners.
Hyde-Smith, U.S. Senator John Hickenlooper (D-Colo.), Mike Braun (R-Ind.), and Mark Warner (D-Va.), all members of the Senate Community Development Finance Caucus, offered the measure to dismantle barriers to capital by bolstering the federal resources available to community financial institutions, organizations that overwhelmingly lend to underserved small business owners.
“Obtaining the credit needed to launch or expand a small business is always hard, and made harder today with inflationary pressures on lending institutions. We know community financial institutions strive to provide access to capital to entrepreneurs, first-time homebuyers, and individuals with everyday credit needs in our communities,” Hyde-Smith said. “By establishing a dedicated Office of Community Financial Institutions within SBA, we can rest assured these institutions will have the resources they need to carry out this critical work.”
“When we opened the Wynkoop, banks turned us away right and left until a community-based lender finally took a chance on us,” said Hickenlooper. “Small businesses are the engine of our economy. We need to make it an even playing field.”
“The Supporting Community Lenders Act is a great opportunity to integrate mission-focused CDFI and MDI banks into SBA’s outreach and servicing of small businesses in underserved, low income and minority communities. The capital gap for these businesses is acute. The members of the Community Development Bankers Association thank Senators Hickenlooper, Hyde-Smith, Braun, and Warner for introducing this important legislation,” said Brian Blake, public policy director, Community Development Bankers Association.
Current institutional barriers prevent around 83 percent of entrepreneurs from accessing bank loans or venture capital. Instead, these small business owners rely on savings or personal credit cards to make ends meet. In 2019, more than 25 percent of startups named lack of credit as their top business challenge. These barriers to credit disproportionately affect entrepreneurs in rural areas, veterans, women, and minorities.
Community Financial Institutions, including Community Development Financial Institutions (CDFIs), Minority Depository Institutions (MDIs), Certified Development Companies (CDCs), and Microloan Intermediaries, exist to support underserved small businesses and close this credit gap. However, these organizations currently lack a designated advocate at the federal level to help navigate federal bureaucracy and take advantage of available programs.
The Supporting Community Lenders Act (S.2099) would create an institutional support system for community financial institutions by:
- Creating an Office of Community Financial Institutions at the SBA
- Defining community financial institutions as federally registered CDFIs, MDIs, CDCs, and Microloan Intermediaries;
- Creating and implementing programs that support the growth and development of these institutions;
- Establishing partnerships with relevant parties within the SBA and across federal agencies, and advocating on these institutions’ behalf;
- Hosting public meetings with stakeholders at least twice a year; and
- Producing comprehensive reports to Congress every three years.
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