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CARES Act: SBA Announces $10 Billion Allocation of PPP Funds to Community Development Financial Institutions (CDFIs)
Practical Law Legal Update w-025-7960 (Approx. 4 pages)
CARES Act: SBA Announces $10 Billion Allocation of PPP Funds to Community Development Financial Institutions (CDFIs)
by Practical Law Finance
| Published on 29 May 2020 • USA (National/Federal) |
The Small Business Administration (SBA) announced that $10 billion of Paycheck Protection Program (PPP) funds will be available exclusively for loans made by Community Development Financial Institutions (CDFIs). CDFIs provide capital to low-income and traditionally underserved communities. The SBA stated that these funds are being allocated to CDFIs to ensure that the PPP provides relief to all communities in need during the COVID-19 crisis.
On March 27, 2020, the US government passed the CARES Act in response to the COVID-19 crisis. Under the CARES Act, the Small Business Administration (SBA) is offering loans under the Paycheck Protection Program (PPP). On April 2, 2020, the SBA issued an interim final rule (Initial Rule) outlining the key provisions for implementing the PPP. Subsequently, the SBA has issued additional interim final rules and guidance (see Practice Note, Road Map to the Coronavirus Aid, Relief, and Economic Security Act (CARES Act): Paycheck Protection Program (PPP).
On May 28, 2020, the SBA announced that $10 billion of Paycheck Protection Program (PPP) funds will be available exclusively for loans made by Community Development Financial Institutions (CDFIs). CDFIs provide capital to low-income and traditionally underserved communities. The SBA stated that these funds are being allocated to CDFIs to ensure that the PPP provides relief to all communities in need during the COVID-19 crisis.
Some observers have been critical of the initial allocation of PPP funds, claiming that PPP funds were lent to large businesses and entities that had other financial resources, rather than to small businesses in dire need of the PPP funds.
The SBA reports that as of May 23, 2020, CDFIs have approved more than $7 billion ($3.2 billion in PPP Round 2) in PPP loans. To date, more than 4.4 million loans have been approved for over $510 billion for small businesses across America.