WASHINGTON – U.S. Senators Roger Wicker, R-Miss., and Cindy Hyde-Smith, R-Miss., joined Senators Mark Warner, D-Va., Chris Van Hollen, D-Md., Gary Peters, D-Mich., and Jerry Moran, R-Kan., in reintroducing bipartisan legislation to promote lasting economic prosperity in low-income, minority, and rural communities.
The Community Development Investment Tax Credit Act would help unlock more equity and long-term financial capital for community development financial institutions (CDFIs). CDFIs often serve as a backbone for underserved communities including small and disadvantaged businesses, which tend to have fewer banking relationships and less access to credit.
“Our country was built by small business, but many in low-income areas have trouble accessing the financing they need to launch and grow their businesses,” Wicker said. “CDFI investments play a pivotal role in bridging these gaps. The proposed tax credit in this legislation would help address the challenges faced by small business owners and provide an alternative to predatory loans.”
“We know access to capital is more challenging in low-income areas unfortunately, which makes it harder for ambitious Mississippians and Americans in these areas to start up or grow their businesses,” Hyde-Smith said. “CDFIs have proven valuable in directing support to these small business owners, and this proposed tax credit would do even more to spur investment in underserved communities.”
This bill will help direct support to lenders that focus on underserved communities by creating a CDFI Tax Credit for private sector investors that make equity, equity-equivalent investments, or long-term patient capital available to CDFIs. The bill would benefit CDFIs of all types, including banks, credit unions, venture capital CDFIs, and loan funds, while providing institutions with the maximum flexibility and financial support they need to increase wealth in low and moderate-income communities.
This legislation has the support of a number of organizations, including the American Bankers Association, Opportunity Finance Network, Inclusiv, Community Development Bankers Association, Independent Community Bankers of America, Local Initiatives Support Corporation, Community Development Venture Capital Alliance, and the CDFI Coalition.
The full text of the legislation can be found here.