03/04/2021 | News release | Distributed by Public on 03/04/2021 10:04
ECIP Provides Capital and Services to Low- and Moderate-Income, Historically Disadvantaged Communities Impacted by COVID-19
WASHINGTON - The U.S. Department of the Treasury announced that it was opening the application process for the Emergency Capital Investment Program (ECIP), a new initiative designed to support access to capital in communities traditionally excluded from the financial system and that have struggled the most during the COVID-19 crisis. The program will ultimately invest $9 billion in Community Development Financial Institutions (CDFIs) and minority depository institutions (MDIs), supporting their efforts to provide financial products for small and minority-owned businesses and consumers in low-income and underserved communities. Treasury's $9 billion investment under ECIP will complement the $3 billion of grants being provided by the CDFI Fund through the CDFI Rapid Response Program and the Emergency Support and Minority Lending Program.
ECIP will provide up to $9 billion in capital directly to depository CDFIs and MDIs to support the provision of loans, grants, and forbearance for small and minority businesses and consumers in low income communities. The program sets aside $2 billion for participants with less than $500 million in assets and an additional $2 billion for participants with less than $2 billion in assets. The funding will provide long-term, low-cost equity and subordinated debt for participating institutions to support low-and-middle income (LMI) communities.
'America has always had financial services deserts, places where it's very difficult for people to get their hands on capital so they can, for example, start a business. But the pandemic has made these deserts even more inhospitable,' said Secretary Janet L. Yellen. 'The Emergency Capital Investment Program will help these places that the financial sector hasn't typically served well. It will allow people to access capital, especially in communities of color and rural areas.'
These programs are designed to provide relief at a moment when many households and small businesses are struggling as a result of the pandemic - and when that pain is not evenly distributed across the country. The American Rescue Plan that President Biden and Vice President Harris have put forward is designed to address that challenge, with measures focused on getting relief to underserved communities, including new emergency grants to help struggling small businesses, investments in state programs that support small business credit, and additional rental assistance to support families trying to stay in their homes. As the Biden-Harris administration works with Congress to pass that plan, Treasury is taking steps with its existing authorities to provide support to those who need it.
Today's announcement is part of $12 billion of emergency support being provided by Treasury to CDFIs and MDIs to help their communities respond to the economic hardships created by the COVID-19 pandemic. In addition to the Emergency Capital Investment Program, Treasury is also implementing two other complementary programs:
Taken together, these three programs, created under the Consolidated Appropriations Act, 2021, enable Treasury to take aggressive action to address the impacts of the ongoing COVID-19 pandemic, and to promote an equitable economic recovery. These historic investments are intended to provide catalytic growth for institutions and communities that have traditionally been underserved by the financial sector.
For more information about the Emergency Capital Investment Program, please visit https://home.treasury.gov/policy-issues/cares/emergency-capital-investment-program.