Senator Smith and Rounds introduce bill to stimulate economic development in underserved communities
US Senators Tina Smith (D-MN) and Mike Rounds (R-SD) have introduced a bill that aims to stimulate economic development in distressed areas and underserved communities.
Their legislation – the CDFI Bond Guarantee Program Improvement Act – would seek to strengthen and expand community development finance institutions (CDFIs), which provide capital and financial services to underserved communities.
Specifically, this would make the CDFI bond guarantee program permanent, providing security to borrowers and lenders while making it more reliable and accessible to smaller CDFIs.
“Unequal access to capital and financial services is a key driver of economic disparity in rural areas, communities of color, and indigenous communities,” Smith said. “This act will stimulate the economic development of these communities by expanding and improving a proven program of effective capital investment and community development.”
In addition, the CDFI Bond Guarantee Program Improvement Act would reduce the minimum loan amount to $ 25 million to allow smaller CDFIs to use the program. Currently, borrowers must have a loan of at least $ 100 million, which means that it can only be used for relatively large projects.
“Our bipartisan legislation creates greater development opportunities in South Dakota, especially in tribal communities,” Rounds said. “This bill will make much-needed changes to the CDFI bond guarantee program and directly address the issues we heard in our discussions with South Dakota stakeholders.”
The CDFI Bond Guarantee Program was enacted in 2010 to provide long-term, low-cost capital to CDFIs, which use the funding for economic development activities in underserved communities. The program’s authorization expired in 2014, but it has been extended year by year in annual appropriation acts.