Providing Access to Capital for Economically Distressed Communities

Small businesses in low- and moderate-income communities will disproportionately feel the negative economic shock from the coronavirus. To temper and displace some of these effects, we have identified some policy recommendations, including: 
 

• Enhance the Payment Protection Program: Clarify and increase resources for the SBA’s Payment Protection Program to ensure access for underserved communities. 

• Regulatory Relief: Amend FDIC, Federal Reserve, and OCC regulatory standards to allow banks (less than 5 billion USD in assets) that target LMI communities more flexibility–such as a wider range within key ratios they must maintain (i.e., liquidity, capital adequacy, and leverage)–to not only be in good standing but also continue to provide capital as needed.

• Balance Sheet Relief: Expand Treasury’s Minority Bank Deposit Program to increase deposits in MDIs that target LMI communities to ensure continued capacity to provide access to capital.

• Minority Business Investment Support: Increase appropriations for the Minority Business Development Agency to create growth equity funds in support of affected Minority-owned Business Enterprises and diverse investment managers.

• Short-term Capital Support: Include federal resources to enhance the Tier 1 Capital of banks that support underserved communities (e.g., MDIs and CDFIs) by fully capitalizing and expanding Treasury’s CDFI Fund Program.

• Long-term Capital Support: Amend the 2017 Tax Cuts and Jobs Act to allow investments in MDIs and CDFIs to qualify for Opportunity Zone benefits.

• Drive repatriation of strategic supply chains and job growth in underserved communities: Amend the Opportunity Zone initiative for corporates.

• Enlist a wider spectrum of Opportunity Zone investors in post-COVID recovery efforts: Extend key Opportunity Zone deadlines.

• Expand the Federal Reserve’s Term Asset-Backed Securities Loan Facility: Expand to all investment-grade asset-backed securities.

• Include those on the frontlines of the pandemic response in economic stimulus measures.

Learn more about the Center for Financial Markets' work on COVID-19.