Harris Announces $1.7 Billion for Businesses in ‘Underserved’ Communities

Harris Announces $1.7 Billion for Businesses in ‘Underserved’ Communities
U.S. Vice President Kamala Harris speaks to reporters after participating in a swearing in ceremony for Eric Garcetti as ambassador to India at the Eisenhower Executive Office Building in Washington, on March 24, 2023. (Anna Moneymaker/Getty Images)
Katabella Roberts

The Biden administration on April 10 announced a $1.7 billion grant program aimed at helping small businesses in underserved communities access the capital and financing services they need to recover from COVID-19 pandemic lockdowns.

Vice President Kamala Harris unveiled the program during a news conference alongside Deputy Treasury Secretary Wally Adeyemo where she called small businesses “the backbone” of the U.S. economy.

According to Harris, the billions of dollars will be granted to approximately 603 community lenders or banks via the Treasury Department’s Community Development Financial Institutions Fund (CDFI), specifically through its Equitable Recovery Program.

That program was established to ensure economic opportunities for underserved people and communities who were disproportionately economically impacted by lockdowns.

In announcing the program, Harris said small businesses employ half of all American workers, and make up more than 99 percent of all businesses across the country.

She noted that the grants, which represent the largest CDFI grant program in history and do not need to be paid back, will go to local lending institutions that primarily serve “overlooked” and minority communities.

The vice president cited her time as district attorney of San Francisco, attorney general of California, and as a U.S. senator, during which she met many small-business owners and saw the “incredible challenges they face,” in particular when it comes to accessing capital at banks.

Grant Details

“Across our nation, there are entrepreneurs and small-business owners with big plans and a vision for the future—folks who want to build a brand, buy inventory, invest in online ads, and hire more workers, but who cannot because they simply don’t have access to the capital or financial services they need,” Harris said.

“These banks predominantly do business in overlooked and underserved communities. They know these communities. They understand these communities. And in particular, most importantly, they know and see the capacity of these communities,” Harris added.

According to Harris, $226 million in grants will go to 70 community lenders in Puerto Rico, while in Mississippi, BankPlus, which serves rural communities, will receive $2.4 million.

In California, PACE Finance Corporation, a non-profit organization that provides loans to many Asian-American-owned small businesses, will receive $2.4 million, and in Pennsylvania, Community First Fund, which lends mostly to businesses owned by people of color, will receive $6 million.

In Louisiana, Liberty Financial Services, part of Liberty Bank, one of the largest black-owned financial institutions in the country, will receive $6 million.

“When we invest in community lenders, we give people across our nation the opportunity to build a business, to buy a home, and to strengthen their community and we help build a future where all people, no matter where they are or where they start, have the resources they need not only to succeed, but to thrive,” Harris said.

Bankruptcy Filings Soar

In a separate statement announcing the grant program, Treasury Secretary Janet Yellen said that allowing lenders to expand access to capital in financially underserved communities will help bolster long-term economic growth across the country.

“These grant funds will be transformative for grantees that are building a more equitable, resilient economy, along with helping sustain our strong economic recovery,” Yellen said.

The Biden administration has also rolled out similar programs aimed at supporting small businesses, including those in underserved communities, such as the State Small Business Credit Initiative, the Emergency Capital Investment Program, and the CDFI Rapid Response Program.
The latest announcement comes amid a surge in bankruptcies across small businesses in the country.

New bankruptcy filings across all major industries saw year-over-year increases for the third month in a row in March, with corporate bankruptcy filings reaching their highest first-quarter levels since 2010, according to data from Epiq Bankruptcy.

A total of 42,368 new bankruptcies were filed in March, up 17 percent from the 36,068 filings registered a year prior, and marking the highest number of monthly filings since April 2021.

American Bankruptcy Institute Executive Director Amy Quackenboss noted in a press release that the rise in bankruptcy filings in the first quarter of this year suggests “growing debt burdens of both consumers and businesses” who are battling with rising inflation and interest rate hikes which have seen the cost of borrowing soar.