Warner, Colleagues Reintroduce Bill to Boost Economic Growth in Underserved & Low-Income Communities
Sep 28 2023
WASHINGTON – Today, U.S. Sen. Mark R. Warner (D-VA), joined by Sens. Roger Wicker (R-MS), Chris Van Hollen (D-MD), Cindy Hyde-Smith (R-MS), Gary Peters (D-MI), and Jerry Moran (R-KS), reintroduced bipartisan legislation to promote lasting economic prosperity in low-income, minority, and rural communities. The Community Development Investment Tax Credit would help unlock more equity and long-term financial capital for community development financial institutions (CDFIs). CDFIs often serve as a backbone for underserved communities including small and disadvantaged businesses, which tend to have fewer banking relationships and less access to credit.
“As someone who worked in the business world long before I ever joined politics, I know well that talent and ambition are not confined by income bracket or zip code. Unfortunately, access to start-up capital often is. CDFIs do the invaluable work of bridging the gap and reaching small businesses in our most vulnerable communities, and we have seen historic investments on this front over the past few years,” said Sen. Warner. “Despite this progress, CDFIs remain in need of additional equity and capital to continue serving their communities. This legislation will create a new tax credit, helping spur important private-sector investments and allowing these community lenders to grow.”
“Our country was built by small business, but many in low-income areas have trouble accessing the financing they need to launch and grow their businesses,” said Sen. Wicker. “CDFI investments play a pivotal role in bridging these gaps. The proposed tax credit in this legislation would help address the challenges faced by small business owners and provide an alternative to predatory loans.”
This bill will help direct support to lenders that focus on underserved communities by creating a CDFI Tax Credit for private sector investors that make equity, equity-equivalent investments, or long-term patient capital available to CDFIs. The bill would benefit CDFIs of all types including banks, credit unions, venture capital CDFIs, and loan funds, while providing institutions with the maximum flexibility and financial support they need to increase wealth in low- and moderate-income communities.
Sen. Warner has been a leader in Congress for CDFIs and Minority Depository Institutions (MDIs). To combat hemorrhaging jobs and loss of economic opportunities during the COVID-19 pandemic, Sen. Warner teamed up with then-Sen. Kamala Harris (D-CA), Sen. Cory Booker (D-NJ), and a bipartisan group of colleagues to introduce the Jobs and Neighborhood Investment Act – an effort that secured endorsements from a host of other advocacy organizations and civil rights groups. In 2022, Sen. Warner, joined by Sen. Mike Crapo (R-ID), launched the Senate Community Development Finance Caucus (CDFC), a bipartisan caucus dedicated to supporting the missions of CDFIs and MDIs by scaling their ability to lend in underserved communities.
Bill text is available here.
“We thank Senator Warner, Senator Wicker and the other bipartisan co-sponsors of the CDFI Tax Bill, which we strongly support,” said Rob Nichols, President and CEO, American Bankers Association. “ABA is proud to represent a number of CDFIs across the country and this legislation would expand investment in these critically important financial institutions, allowing them to have an even bigger impact in the communities they serve.”
“OFN applauds Senator Warner’s and Senator Wicker’s ?continued leadership in supporting community development financial institutions (CDFIs). The Community Development Investment Tax Credit Act will help drive more private capital to CDFIs offering affordable, responsible financing to low-wealth urban, rural, and Native communities across the country. We look forward to continuing to work with Senators Warner and Wicker to expand the tools available to CDFIs to finance economic justice and opportunity across the country,” said Harold Pettigrew, President and CEO, Opportunity Finance Network.
“The Community Development Investment Tax Credit Act of 2023 will spur significant private investment in Community Development Financial Institutions (CDFIs), increasing the availability of critically-needed long-term capital that will expand CDFIs’ capacity to develop and deploy affordable, responsible loans designed to meet the needs of the communities they serve. This expanded private investment will help CDFI intermediaries, like Inclusiv, support the growth of high-impact CDFI credit unions, allowing them to expand their lending to advance affordable homeownership, grow micro and small businesses, ensure low- and moderate-income homeowners can access energy efficiency and climate resilience home improvements, and more. We are grateful for Senator Warner’s deep commitment to the CDFI movement’s growth and impact,” said Cathie Mahon, President and EO, Inclusiv.
“The CDFI Investment Tax Credit is a smart and strategic tool. The credit uses a very small amount of public resources to leverage a multiple of private dollars and generate enormous community impact,” said Jeannine Jacokes, CEO, Community Development Bankers Association.
“The Independent Community Bankers of America appreciates Senator Warner’s leadership of the CDFI Caucus, and his work with Sen. Wicker on the CDFI Tax Credit Act, which will help spur equity investment in CDFIs, facilitate de-novo formation, and extend credit to underserved communities,” said Rebeca Romero Rainey, President and CEO, Independent Community Bankers of America.
“The Local Initiatives Support Corporation (LISC) applauds Senators Warner and Wicker for introducing the Community Development Investment Tax Credit Act of 2023. Community Development Financial Institutions (CDFIs) have time and time again proven their ability to leverage public and private capital to support investments in some of the most underserved communities in the country. This tax credit, by incentivizing long term investments in CDFIs, will allow CDFIs to in turn provide longer term, lower cost loans to finance affordable housing, small businesses, homeownership and essential community facilities in their neighborhoods,” said Matt Josephs, Senior Vice President for Policy, Local Initiatives Support Corporation.
“The CDFI Tax Credit will provide a powerful tool for community development venture capital funds to raise private investment capital to help us reach scale, bringing good jobs and business development to low-income communities across that nation,” said Kerwin Tesdell, President, Community Development Venture Capital Alliance. “The legislation also includes important fixes to the definition of CDFI that will correct technical issues that have long caused community development venture capital funds to be underrepresented among certified CDFIs.”
“The CDFI Coalition is pleased to add its voice in strong support for the legislation sponsored by Sens. Warner and Wicker to establish a tax credit for Community Development Financial Institutions (CDFIs). CDFIs provide financial products and services in urban neighborhoods and rural areas underserved by traditional financial institutions, particularly those communities with high rates of poverty and unemployment. Throughout the last economic downturn, CDFIs served as economic shock absorbers, providing flexible and patient capital, rigorous risk management, and commitment to the projects in their communities and the sustainability of their borrowers. While traditional lenders fled economically distressed communities, CDFIs stepped in to fill the void. Since the advent of the economic crisis prompted by the pandemic, CDFIs have been on the frontlines of providing financial and technical assistance to small and minority-owned businesses. CDFIs fill a vital niche in the nation's financial services delivery system by serving communities and market sectors that conventional lenders cannot - with the ultimate goal of bringing CDFI customers into the mainstream economy as bank customers, homeowners and/or entrepreneurs. The proposed CDFI Tax Credit will provide a new avenue for CDFIs to raise capital that will be deployed to finance small businesses, construct affordable housing, and support community facilities in disadvantaged communities across the country. CDFIs leverage over $12 in private capital to every $1 in federal support, so the resources authorized by the tax credit will extend far beyond the amount authorized and help CDFIs to fill the widening credit gap encountered by economically disadvantaged communities across the country,” said Ceyl Prinster, President and CEO, Colorado Enterprise Fund and Chair of the CDFI Coalition.
“Senators Warner and Wicker's innovative proposal to drive more resources into our communities is forward-thinking and much needed. CDFIs, whose missions are to create economic opportunity for all, have an unmatched ability to leverage private capital sources, like equity and patient debt, into community-centered initiatives. Unfortunately, the community need is outpacing the resources available to CDFIs therefore it is important to develop new ways to attract and sustain investment into our financial institutions. Additional investment options like the CDFI Tax Credit will be a game-changer for our industry across the country. The VA CDFI Coalition is excited by the possibilities these investments could create across Virginia and hope to see this pass,” said Leah Fremouw, Board President, VA CDFI Coalition.