The GGRF is a first-of-its-kind program that will provide competitive grants to mobilize financing and private capital for clean energy and climate projects that reduce greenhouse gas emissions. The Coalition will play a crucial role in advocating for equitable access and effective implementation of GHGRF in underserved communities.
“The Coalition is uniquely positioned to leverage the expertise of multiple organizations devoted to ensuring the greatest possible impact in low-income and disadvantaged communities,” said Lenwood V. Long, Sr., President and CEO of The Alliance. “OFN’s commitment to economic justice and advancing financial inclusion in underserved communities aligns with our mission, and we are thrilled to have them join.”
“We cannot squander this opportunity to unite economic justice and environmental justice,” said Beth Lipson, OFN Interim President and CEO. “OFN is pleased to join this coalition of allied organizations to advocate for equity in the Greenhouse Gas Reduction Fund.”
The growth of The Coalition is and will be vital to amplifying the voices of community financial institutions, such as CDFIs, MDIs, credit unions, and mission focused loan funds, and the communities they serve.
To date, The Coalition is comprised of 15 organizations including: African American Alliance of CDFI CEOs, African-American Credit Union Coalition, The Chisholm Legacy Project, Community Development Bankers Association, Inclusiv, National Association for Latino Community Asset Builders, National Urban League, National Bankers Association, Native CDFI Network, National CAPACD, Prosperity Now, Oweesta Corporation, Opportunity Finance Network, US Black Chamber, and Urban Strategies, Inc.
The African American Alliance of CDFI CEOs (The Alliance) is a coalition of more than 75 CEOs of Black-led Community Development Financial Institutions (CDFIs), comprising loan funds, credit unions, venture capital firms, and non-profit developers. Since 2018, The Alliance’s network collectively services all 50 states and the District of Columbia. As a result, members are uniquely positioned to address issues related to housing and access to capital for African American populations and communities. Learn more about The Alliance and its programs at http://www.aaacdfi.org.
About Opportunity Finance Network
Opportunity Finance Network (OFN) is a leading national network of more than 370 community development financial institutions (CDFIs), specialized lenders that provide affordable, responsible financial products and services in low-income rural, urban, and Native communities nationwide. As a trusted intermediary between CDFIs and the public and private sectors, OFN works with its partners – banks, philanthropies, corporations, government agencies and others – to create economic opportunity for all by strengthening and investing in CDFIs. Since its founding in 1986 and through 2020, the network has originated $91.2 billion in financing in rural, urban, and Native communities, helping to create or maintain more than 2.2 million jobs, start or expand 535,550 businesses and microenterprises, and support the development or rehabilitation of more than 2.2 million housing units and more than 13,270 community facility projects. Learn more about OFN and its programs at ofn.org.
On behalf of the African American Alliance of CDFI CEOs, I am delighted to extend our warmest congratulations to Harold B. Pettigrew Jr. on his appointment as the CEO of the Opportunity Finance Network (OFN). As an esteemed member of the African American Alliance of CDFI CEOs, Pettigrew’s exemplary leadership and commitment to community economic development have left a lasting impact on the communities he serves.
This is a pivotal moment for the CDFI industry, and we are extremely proud to see one of our own members assume the helm of OFN, a prominent organization dedicated to serving CDFIs across the nation while promoting economic and social justice. Pettigrew’s appointment signifies not only his outstanding capabilities but also the recognition of the vital role that CDFI leaders play in driving positive change in the financial sector.
Once again, congratulations to Harold B. Pettigrew Jr. on this well-deserved appointment.
We eagerly anticipate the positive impact his leadership will bring to OFN and the broader CDFI industry.
Be Steadfast!
Lenwood V. Long, Sr.
President & CEO, African American Alliance of CDFI CEOs
Supporting the national Fund’s mission to promote economic equity & create catalytic impact
Orlando, Florida | [February 22, 2023] – The African American Alliance of CDFI CEOs (The Alliance) announced that it has received $5 million in funding from The Rockefeller Foundation to support the Black Renaissance Fund (BRF), a national fund providing patient capital to Black-led Community Development Financial Institutions (CDFIs) and long-term operating support for the Alliance. By enabling Black-led CDFIs to increase their assets with credit enhancements that help fortify their financial position, expand their lending capacity, and reduce interest rates, the Black Renaissance Fund is a vehicle for ensuring more affordable capital reaches Black communities.
“We are grateful for The Rockefeller Foundation’s support in our mission to advance economic equity and opportunity for Black-led CDFIs,” said Lenwood V. Long, Sr., President & CEO of The Alliance. “The Black Renaissance Fund is crucial in addressing systemic barriers and fosters an ecosystem for increased investments in affordable housing, high- quality job creation, small business support, and community facilities development in marginalized communities served by Black-led CDFIs.”
While CDFIs have been a vital source of capital for underserved communities for decades, Black communities have historically been underrepresented. Launched in September 2022, the Black Renaissance Fund aims to level the playing field for Black communities. By providing below market interest rate loans to members of The Alliance at a time when national borrowing rates are already up and could continue to rise, this national loan fund is focused on building wealth and racial equity in Black communities across the United States.
“CDFIs empower populations underserved by traditional lenders. Despite their critical services, Black-led CDFIs still experience inequitable access to capital, capacity-building resources, and technical assistance,” said Gregory Johnson, Managing Director of the Equity & Economic Opportunity initiative at The Rockefeller Foundation. “Studies have shown that from 2014 to 2017, the assets of white-led CDFIs grew by $21.8 billion, while those of minority-led CDFIs grew by just $682.5 million. This is why support for organizations like The African American Alliance of CDFI CEOs is so critical.”
The $5 million grant from The Rockefeller Foundation is part of its commitment to the White House Economic Opportunity Coalition, which aims to strengthen the capacity of CDFIs.
To date, the BRF has raised $17.5 million in funds. The Black Renaissance Fund is currently open to additional investments from other funders. For more information on how to invest in the Fund, please contact Amber Bond at [email protected] or visit www.aaacdfi.org.
# # #
About The African American Alliance of CDFI CEOs
The African American Alliance of CDFI CEOs (The Alliance) is a coalition of more than 80+ CEOs of Black-led Community Development Financial Institutions (CDFIs), comprising loan funds, credit unions, venture capital firms, and non-profit developers. Since 2018, The Alliance has represented all 50 states and the District of Columbia. As a result, members are uniquely positioned to address issues related to housing and access to capital for African American populations and communities. Learn more about The Alliance and its programs at http://www.aaacdfi.org.
About The Rockefeller Foundation
The Rockefeller Foundation is a pioneering philanthropy built on collaborative partnerships at the frontiers of science, technology, and innovation that enable individuals, families, and communities to flourish. We work to promote the well-being of humanity and make opportunity universal and sustainable. Our focus is on scaling renewable energy for all, stimulating economic mobility, and ensuring equitable access to health care and nutritious food. For more information, sign up for our newsletter at rockefellerfoundation.org and follow us on Twitter @RockefellerFdn.
This Black History Month we are recognizing the contributions of Black Americans and reflecting on the ongoing struggle for racial equity, particularly in the wealth gap. Black communities continue to face discrimination and barriers to economic opportunity. Let’s use this time to educate ourselves, support Black-led organizations and businesses, and work towards closing the racial wealth gap and creating a more equitable society for all.
Stay tuned for how we’re celebrating the past, present and future of Black America this month.
We’ll be spotlighting Alliance members on social media, which can learn more about below.
Kenya McKnight-Ahad: Founder & CEO of the Black Women’s Wealth Alliance
Kenya McKnight-Ahad is the founder and CEO of the Black Women’s Wealth Alliance, a public benefit corporation that focuses on increasing the economic stability and prosperity of historically black women and girls.
Black Women’s Wealth Alliance is a culturally specific agency providing Black Women with wealth education, business support services, financial assistance and incubation space to operate their businesses. BWWA leads and innovates wealth creation work with Black Women in Minnesota since 2014 and has served more than 4,500 Black Women business owners, students and career professionals in Minnesota to start & maintain businesses, complete college, advance careers, purchase homes and to remove core barriers to building wealth. Additionally, BWWA has provided over $2 million in small capacity grants & facilitated lending and works in partnership across the business and wealth ecosystem. In 2021 BWWA purchased a commercial building that is now called ZaRah and is home to 20 businesses within the holistic wellness, retail and food industries- 16 businesses are owned and led by African American Women. ZaRah targets mid-stage African American Women owned businesses & entrepreneurs, providing them with core services to further Black wealth through our wrap around support services that foster critical business skills, revenue, affordable operational space, and overall growth & strengthening within industry marketplaces.
Under McKnight-Ahad’s leadership, BWWA has served more than 4,000 black women across Minnesota to date, investing over $2m in small-capacity grants. As a resident of North Minneapolis for 35 years, McKnight started her career as a public and charter school educator. Since 2007, she has served in key leadership roles across the economic development sector in metro Minnesota, including on community development boards, commissions, and related initiatives. Additionally, she has extensive experience as a direct business service provider, facilitating lending and technical support to more than 400 micro businesses, leading business legal & marketing clinics, and youth entrepreneurship programs.
Kenya shares why she’s a member of the Alliance:
“I’m a member of the Alliance because it offers me the opportunity to grow, learn and share with other leaders across the country doing amazing work to build upper mobility in our communities which is very important to me. The Alliance is helping BWWA broader our strategies and grow capacity to be a CDFI, we’re grateful and Angela is amazing to work with.” –Kenya McKnight-Ahad
Kevin Daniels: President & Chairman of Array Community Development Corporation and Chief Operating Officer of Array Strategies
Kevin Daniels is the President and Chairman of Array Community Development Corporation and Chief Operating Officer of Array Strategies. Kevin resumed this position after taking a leave of absence to serve as the Director of External Engagement with the North Carolina Community College System. In his previous role, he served as Director of Community and Constituent Affairs for North Carolina Governor Pat McCrory. He was tasked with the coordination of the outreach activities to support the Governor’s key initiatives, in conjunction with non-profit organizations, the business community, trade associations, Federal, State and local government agencies. Several initiatives include increasing contract opportunities for small and minority businesses, Anti-Human Trafficking, Historically Black Colleges and Universities summer internships, workforce development and public safety. Kevin also served as the Governor’s Liaison to the International Visitors Leadership Program, a US State Department sponsored initiative to increase mutual understanding between the people of the United States and the people of other countries by means of educational and cultural exchange. In his previous role, Kevin served as the State Director for the AmeriCorps, administering a $4.4 million grant and overseeing day to day operations for 16 non-profit organizations that spanned 70 counties with nearly one thousand members.
For generations, the Black Community living in coastal areas has had a proud heritage of commercial fisherman. However, over the past few decades, there’s been a significant decline in the number of thriving black owned businesses in this industry. Along with their strategic partners, Array launched a loan fund and technical assistance initiative to boost minority commercial fishing. The state of North Carolina has a goal of creating a $100 million oyster industry supported by 1,000 jobs. Their specialized program will work to ensure the Black community is included in this statewide goal.
Kevin shares why he’s a member of the Alliance:
“Array Community Development Corporation joined the Alliance for several reasons. First, we support the mission and believe this is the premier organization to support African American-led CDFIs. Secondly, Lenwood V. Long, Sr. has a stellar reputation in North Carolina as a champion for the Black-owned businesses and the communities in which they serve. As a young organization, our board and executive team firmly believed we can benefit from the experience, relationships and leadership provided by the Alliance.” – Kevin Daniels
The Community Builders of Color Coalition, led by The Alliance, is working to ensure Black and Brown CDFIs, MDIs, and Community Economic Development Organizations are positioned to help small businesses and underserved communities.
We are heartbroken and overwhelmed by the tragic and wholly unnecessary beating and death of Tyre Nichols.
Tyre Nichols was a young, healthy Black man. He was a father to his four-year-old son and a great friend to many. Tyre worked alongside his stepfather at FedEx and during his downtime, enjoyed skateboarding and photography. Tyre’s life was special, layered, and cut short by senseless police brutality. A pattern that keeps repeating in the streets of America.
For far too long, the Black community has been subjected to police brutality and racial profiling at an alarming and disproportionate rate. This has led to an increase in the number of deaths caused by law enforcement officers, the very people who pledged to protect us. We have not come far enough since the beating of Rodney King, the death of Breonna Taylor, or George Floyd’s killing. The system is broken, and we must collectively fight for humanitarian reform. We must act now before another life is taken away.
When we talk about police brutality, it’s important to remember that this isn’t just a problem for Black people. It’s a problem for everyone who cares about justice and human rights.
We all need to work together to callout and eliminate anti-Blackness in all aspects of law enforcement so that the system no longer devalues and criminalizes Black people, and instead protects and serves Black communities.
At the Alliance, we are committed to addressing systemic oppression in order to ensure rights and life for Black people. We call on law enforcement, legislators, and policymakers to come together urgently to enact reforms that will preclude such tragedies from occurring in the future.
We will not stop standing up and speaking up for economic and social justice for Black people and Black communities.
Martin Luther King, Jr. stated “Law and order exist for the purpose of establishing justice and when they fail in this purpose, they become the dangerously structured dams that block the flow of social progress.”
Director, Office of Financial Assistance, Office of Capital Access
U.S. Small Business Administration
409 3rd St, SW.
Washington DC 20416
Re: RIN 3245-AH92—Small Business Lending Company (SBLC) Moratorium Rescission and Removal of the Requirement for a Loan Authorization
Dear Ms. Seaborn:
On November 7, 2022, Volume 87, No. 214 of the Federal Register contained a Notice of Proposed Rulemaking on Small Business Lending Company (SBLC) Moratorium Rescission and Removal of the Requirement for a Loan Authorization (87 FR 66963).[1] The proposed rule, if implemented, will lift the moratorium on licensing new Small Business Lending Companies (SBLCs), add a new type of entity called a Mission-Based SBLC, and remove the requirement for a Loan Authorization.
The African American Alliance of CDFI CEOs (the Alliance) is pleased to provide the following comments in response to the Proposed Rulemaking, 87 FR 66963. The Alliance is a membership-driven intermediary organization that aims to: build the capacity of member organizations; build bridges to economic stability, well- being, and wealth for Black individuals, families, and communities; and build power in Black communities by challenging and influencing financial sectors to operate more equitably. Since launching in 2018, the Alliance has established a network of 72 CEOs of Black-led Community Development Financial Institutions (CDFIs), which includes loan funds, credit unions, and venture capital funds. Alliance members reach historically underserved communities in all 50 states by providing financial services in the small business, affordable housing, and commercial real estate development sectors.
SBLC Moratorium Rescission
The SBA Proposed Rule lifts the moratorium on licensing new SBLCs and creates a new type of SBLC, the Mission-Based SBLC, to fill identified capital market gaps and provide targeted financial assistance to underserved markets.[2] The Alliance generally agrees with the intent of the Proposed Rule, as it purports to afford vulnerable entrepreneurs in markets historically overlooked by traditional financial institutions an opportunity to obtain critical financing on non-predatory terms. However, we urge SBA to provide additional clarification around some of the key pieces of the Proposed Rule, particularly as it relates to the conversion of existing Community Advantage lenders to Mission-Based SBLCs.
Lack of Specificity Around Certain Aspects of the Proposed Mission-Based SBLC Designation
Costs Associated with Obtaining Mission-Based SBLC Status
The Small Business Act authorizes SBA to charge a fee for conducting safety and soundness examinations of SBA-Supervised Lenders. As such, prospective SBLCs – both regular and Mission-Based – will be subject to a minimum $10,000 initial safety and soundness examination at the time of application and at least once every two years thereafter.[1] Additionally, SBA will conduct targeted reviews of loan files in between the regularly scheduled safety and soundness exams, at a biennial cost of $50,000 to $150,000 per SBLC depending on the size of its loan portfolio.[2]
Currently, each SBLC that makes or acquires a 7(a) loan must maintain at least unencumbered paid-in capital and paid-in surplus of at least $5 million, or 10 percent of the aggregate of its share of all outstanding loans, whichever is greater.[3] SBA considered extending the $5 million capitalization requirement to prospective Mission-Based lenders but ultimately determined that such a requirement would limit the number of entities that would be eligible for an SBLC license.[4] Instead, per the Proposed Rule, “a Mission-Based SBLC must maintain a minimum amount of capital at the discretion of the Administrator in consultation with SBA’s Associate Administrator for SBA’s Office of Capital Access (AA/OCA), to ensure sufficient risk protection for SBA and lenders while not burdening smaller lenders with large capital requirements.”[5] The costs associated with safety and soundness examinations and targeted reviews compounded by the ambiguity surrounding Mission-Based SBLC capital requirements concerns the Alliance. We urge the SBA to avoid the adoption of any Mission-Based SBLC capital requirements that would dissuade institutions, including existing Community Advantage lenders, from pursuing a Mission-Based SBLC designation.
Mission-Based Lending Requirements Per the Proposed Rule, Mission-Based SBLCs will be subject to all the requirements imposed on regular SBLCs and SBA Supervised Lenders.[6] In addition to those requirements, the Proposed Rule requires that a certain percentage of a Mission-Based SBLCs loans be dedicated to filling an identified capital market gap.[7] However, in lieu of a uniform mission-based lending requirement applicable to all Mission-Based SBLCs, SBA will determine on a case-by-case basis the minimum acceptable percentage of loans that a Mission-Based SBLC must make in identified capital market gaps, maximum loan size, geographic area of operation, and capitalization. The Alliance has strong concerns that the lack of specificity around key concepts of the Proposed Rule (i.e., types of capital market gaps that will be sufficient to satisfy Mission-Based SBLC requirements, percentage of loans that must be made to fill identified capital market gaps, maximum loan size, application process, etc.) makes it difficult for existing Community Advantage lenders and other prospective Mission-Based SBLC applicants to determine if conversion to a Mission-Based SBLC is a prudent option for their institution. The Alliance also finds it troubling that for-profit institutions seeking regular SBLC status, unlike their mission-based counterparts, will not be required to dedicate a certain minimum amount of lending to filling identified capital market gaps, as this runs counter to the underlying aim of the Proposed Rule – i.e., increased and targeted lending to underserved capital markets. Though the individualized approach outlined in the Proposed Rule affords Mission-Based SBLCs a certain level of operational flexibility and reduced risk exposure, the Alliance fears that the absence of similar guardrails for the three new regular SBLCs proposed by SBA will not result in increased access to financing in undercapitalized markets.
Proposed Rule Impact on Community Advantage Pilot Program
The Alliance’s general support of the SBLC proposal should not be construed as dissatisfaction with the Community Advantage Pilot Program. In fact, the Alliance was pleased to collaborate with SBA on the recent reforms to the Community Advantage Program adopted in 2022, including, but not limited to: (1) the extension of the pilot program through September 30, 2024; (2) the lifting of the four-year lender moratorium on new CA Lender participation applications; (3) the increase to the maximum CA loan size from $250,000 to $350,000; (4) the simplification of underwriting and collateral requirements for borrowers and lenders; (5) the allowance for lenders to make revolvers and lines of credit, interest-only periods, and other loan modifications that meet borrowers where they are to best serve their capital needs; and (6) the removal of restrictions that can keep individuals with criminal backgrounds from accessing the CA program.[1]
The Alliance firmly believes that the CA program can be a viable option for increasing lending volume in underserved markets. However, though the reforms of 2022 were greatly appreciated, the program must continue to evolve. Additional reforms to strengthen the CA program – e.g., the immediate extension of the program beyond the current program sunset of September 30, 2024; expansion of program eligibility to businesses owned and controlled by women and minorities; provision of technical assistance (TA) grants for CA lenders; reduction in the minimum CA program SBSS score from 140 to 130, etc. – will prove instrumental in attracting new lenders to the program to meet the growing demand for affordable capital in underserved communities. Ultimately, a strengthened CA program operating in concert with the proposed Mission-Based SBLC concept will result in a significant increase lending activity in underserved communities, particularly for the 51 percent of small employer firms with unmet financing needs.[1]
* * *
Removal of Requirement for Loan Authorization
Currently, the 7(a) Loan Program, including the Community Advantage Pilot Program, and the 504 Loan Program require a Loan Authorization providing the terms and conditions under which SBA will make or guarantee business loans.[1] The terms and conditions of each loan are also submitted into E-Tran by the SBA lender through the submission of the loan application data and conditions.[2] SBA proposes to remove the requirement for a Loan Authorization as a required document for 7(a) loans and instead rely on the use of the terms and conditions of the loan application as submitted by the SBA lender into E-Tran.[3]
The Alliance generally agrees with SBA’s assertion that the current process to capture the loan terms and conditions through the Loan Authorization is time-consuming, cumbersome, and duplicative. However, we do not support the elimination of the Loan Authorization requirement at this time. Lenders have come to rely upon Loan Authorizations as a means of validating that they have satisfied all requirements at or prior to closing of the loan. As such, the elimination of the Loan Authorization requirement could potentially lead to increased instances of Lender non-compliance.
* * *
The Alliance shares SBA’s goal to better meet the needs of America’s small businesses, create jobs, assist with recovery from the COVID-19 pandemic, and grow the economy, fueling American entrepreneurship, particularly in communities of color served by Alliance members. The Alliance looks forward to continued dialogue with SBA to develop a long-term solutions to combat capital market gaps through a strengthened Community Advantage Program working in unison with SBLCs, both regular and Mission-Based.
Thank you once again for the opportunity to comment.
Sincerely,
[1] Small Business Lending Company (SBLC) Moratorium Rescission and Removal of the Requirement for a Loan Authorization, 87 Fed. Reg. 66,967 (Nov. 7, 2022).
Community Builders of Color Coalition comment on implementation of EPA’s Greenhouse Gas Reduction Fund and propose that minority led CDFIs can meet the demand for green energy funds
[Orlando, FL. 12/8/2022] Nine BIPOC organizations of the Community Builders of Color Coalition (The Coalition) urge the U.S. Environmental Protection Agency (EPA) to ensure that minority communities can benefit equally from the Greenhouse Gas Reduction Fund (GHGRF) as authorized by the Inflation Reduction Act. The Coalition advocates for equity in all aspects of the GHGRF implementation, and that at least 40% of awarded capital goes to community financial institutions such as CDFIs, MDIs and credit unions.
The Coalition, a group of nine organizations led by the African American Alliance of CDFI CEOs (The Alliance), provides comments in response to EPA’s request for information regarding implementation of the GHGRF. The Coalition urges that effective implementation of GHGRF requires a thorough understanding of underserved communities and the types of clean energy projects they will find most beneficial.
“Climate and environmental effects are not an intangible threat to the U.S. Latino population. A 2021 study cited that 71% of U.S. Hispanic adults say climate change is affecting their local community (vs. 54% of non-Hispanic adults). In considering how EPA Greenhouse Gas Reduction Funds are allocated, there must be a concerted effort to tap organizations that are entrenched in brown and black communities. These organizations are uniquely and best positioned to reach the very populations that are most negatively affected by environmentally detrimental offenses.” – Marla Bilonick President and CEO, National Association for Latino Community Asset Builders.
With their success in deploying critical capital to disadvantaged communities, minority-led Community Development Financial Institutions (CDFIs) are well-positioned to operationalize GHGRF funds for developing green energy projects in communities typically overlooked for climate investments. The GHGRF provides CDFIs with the opportunity to diversify their lending portfolios and meet the demand for clean energy solutions in low-income and disadvantaged communities.
“Minority and underserved communities are often more vulnerable to the harmful impact of climate change. Our banks serve communities that are 77% a minority, providing financial support and access to much-needed resources. As we create a more equitable future, it’s long overdue that financial backing goes to deeply-rooted organizations that have historically served minority communities.” – Nicole Elam Esq., President and CEO of the National Bankers Association.
Additionally, the Coalition strongly recommends that the EPA explicitly make all certified CDFIs, FDIC-insured Minority Depository Institutions (MDIs), and credit union MDIs eligible participants and that the EPA uses an equity lens in implementing GHGRF and prioritize those applications where all members of the coalition are committed to projects that both reduce CO2 emissions and are committed to equity goals. Finally, the funding should be allocated to multiple community financial institutions such as CDFIs, MDIs and credit unions.
“We firmly believe that the best strategy to effectively confront racial inequities and climate change in our country is to ensure local, community-based organizations led by people of color in partnership with organizations such as those represented by this coalition lead the implementation and deployment of the historic levels of capital and federal resources. Collectively, we have the relationship and social infrastructure in place that are necessary to successfully achieve the program goals,” – Seema Agnani, Executive Director, National CAPACD.
The Coalition is comprised of nine member organizations below:
“This alliance of Black and Brown led CDFI organizations, collectively serving underrepresented African American, Latino, Native and AAPI entrepreneurs, has not only demonstrated that we are able to come together and work together, but by doing so we are communally best positioned to mitigate outcomes for the communities most impacted by environmental catastrophe caused by greenhouse gases.”- Gary Cunningham, President and CEO, Prosperity Now.
“Green energy solutions are often out of reach for Black communities. The Alliance seeks to level the playing field by working with a coalition that understands the Greenhouse Gas Reduction Fund’s potential to scale climate investments in Black and Brown disadvantaged communities. The Coalition is eager to use its unique expertise to help ensure that the GHGRF will have the greatest possible impact in low-income and disadvantaged communities and ensure it is implemented equitably.” – Lenwood V. Long, Sr., President and CEO, The Alliance.
“As financial cooperatives, CDFI and MDI credit unions design solutions to be responsive to their local economies and to meet the needs of people who have been excluded from the mainstream financial system. Equitable solutions to reduce greenhouse gas emissions must be grounded in scaling local solutions at the national level.” – Cathie Mahon, President and CEO, Inclusiv.
“As place-based peoples, Native communities are on the front lines of climate change, disproportionately feeling its effects more broadly and severely than most other Americans. From California to Louisiana to Arizona to Alaska, increased wildfires, pervasive drought, flooding, ocean acidification, and sea level rise already are devastating tribal economies and ways of life, impacting Native agriculture, hunting and gathering, fisheries, forestry, energy, recreation, and tourism enterprises. It is imperative that EPA’s Greenhouse Gas Reduction Funds allocate adequate funds to tribal governments and Native organizations that are proportional to the vast geographic extent of tribal lands and the gravity of the climate challenges Native communities face.” – Pete Upton, Interim CEO, Native CDFI Network.
To learn more about the Alliance’s GHGRF advocacy efforts, please visit www.aaacdfi.org. For the full EPA response for feedback submitted by the Coalition, click here.
###
About The African American Alliance of CDFI CEOs
The African American Alliance of CDFI CEOs (The Alliance) is a coalition of more than 70 CEOs of Black-led Community Development Financial Institutions (CDFIs), comprising loan funds, credit unions, venture capital firms, and non-profit developers. Since 2018, The Alliance has represented all 50 states and the District of Columbia. As a result, members are uniquely positioned to address issues related to housing and access to capital for African American populations and communities. Learn more about The Alliance and its programs at http://www.aaacdfi.org.
The Alliance, NALCAB, Alliance to Save Energy propose that minority led CDFIs can meet the demand for green energy funds
[Orlando, FL. 11.8.2022] – The African American Alliance of CDFI CEOs (The Alliance), in partnership with Alliance to Save Energy and NALCAB, urge the Environmental Protection Agency (EPA) to ensure that minority communities can benefit equally from the Greenhouse Gas Reduction Fund (GHGRF). In its joint comments, the Alliance advocates for equity in all aspects of the GHGRF implementation, and that at least 40% of awarded capital goes to non–depository community lenders.
With their success in deploying critical capital to disadvantaged communities, minority-led Community Development Financial Institutions (CDFIs) are well-positioned to operationalize GHGRF funds for developing green energy projects in communities typically overlooked for climate investments. The GHGRF provides CDFIs with the opportunity to diversify their lending portfolios and meet the demand for clean energy solutions in low-income and disadvantaged communities.
“Green energy solutions are often out of reach for Black communities. The Alliance seeks to level the playing field by building a coalition that understands the Greenhouse Gas Reduction Fund’s potential to scale climate investments in disadvantaged communities. It is crucial that these communities are positioned to maximize this opportunity. As members of the communities they serve, Alliance members can address the unmet need for green investments in these communities and ensure the GHGRF is implemented equitably.” – Lenwood V. Long, Sr., President & CEO of The Alliance.
“The GHGRF provides a once in a generation opportunity for green investment in low-income and disadvantaged communities, and it’s critically important to ensure that the funding for this initiative also goes to community lenders who are representative of and embedded in the communities they serve,” said Paula Glover, President of the Alliance to Save Energy. “Energy equity and affordability are essential to ensuring a just energy transition and it’s our duty to make certain that BIPOC communities are able to access vital funding for transformational energy efficiency, zero emissions, and climate resiliency projects.”
“NALCAB applauds the creation of the GHGRF, a first of its kind program to help further environmental justice by providing competitive grants to support projects that reduce greenhouse gas emissions particularly in low income and disadvantaged communities. We look forward to working with the Environmental Protection Agency (EPA) in ensuring equity in the program’s implementation.”- Marla Bilonick, President and CEO, NALCAB
To become a member of The Alliance or for more information about the GHGRF comment letter and our advocacy efforts, please visit www.aaacdfi.org.
###
About The African American Alliance of CDFI CEOs
The African American Alliance of CDFI CEOs (The Alliance) is a coalition of more than 69 CEOs of Black-led Community Development Financial Institutions (CDFIs), comprising loan funds, credit unions, venture capital firms, and non-profit developers. Since 2018, The Alliance has represented all 50 states and the District of Columbia. As a result, members are uniquely positioned to address issues related to housing and access to capital for African American populations and communities. Learn more about The Alliance and its programs at http://www.aaacdfi.org.
About NALCAB
The National Association for Latino Community Asset Builders, NALCAB, is the hub of a national network of more than 190 mission-driven organizations in 45 states, DC and Puerto Rico that serve ethnically diverse Latino communities across the US. Members of the NALCAB Network invest in their communities by building affordable housing, addressing gentrification, supporting small business growth, and providing financial counseling on issues such as credit building and home ownership. Our mission is to strengthen the economy by advancing economic mobility in Latino communities. As a grant maker and US Treasury-certified CDFI lender with offices in San Antonio and Washington DC, NALCAB serves hundreds of thousands of low- and moderate-income people, advancing economic equity and inclusivity.
About the Alliance to Save Energy
Founded in 1977, the Alliance to Save Energy is a nonprofit, bipartisan alliance of business, government, environmental and consumer leaders working to expand the economy while using less energy. Our mission is to promote energy productivity worldwide – including through energy efficiency – to achieve a stronger economy, a cleaner environment and greater energy security, affordability, and reliability.
The SSBCI Black Business Working Group, which is comprised of the leaders of some of the best and brightest in the Black business policy ecosystem – including the U.S. Black Chambers, Inc., Prosperity Now, Hope Credit Union, Association for Enterprise Opportunity and the African American Alliance of CDFI CEOs takes this opportunity to respond to the Department of Treasury’s Request for Information regarding TA opportunities in the SSBCI.
Below is the response ———————————————————–
Mr. Jeffrey Stout
Director
State Small Business Credit Initiative
U.S. Department of the Treasury
1500 Pennsylvania Avenue NW
Washington, DC 20220
VIA ELECTRONIC SUBMISSION: Submitted to Regulations.gov (87 FR 57558) Document #2022-20326
Re: Request for Information (RFI) on $200 million in remaining Technical Assistance funds as authorized by the American Rescue Plan Act
Dear Director Stout:
The SSBCI Black Business Working Group, which is comprised of the leaders of some of the best and brightest in the Black business policy ecosystem – including the U.S. Black Chambers, Inc., Prosperity Now, Hope Credit Union, Association for Enterprise Opportunity, and the African American Alliance of CDFI CEOs – appreciates this opportunity to respond to the Department of Treasury’s Request for Information regarding technical assistance (TA) opportunities in the State Small Business Credit Initiative (SSBCI).
To miss out on this opportunity to support Black businesses would be catastrophic. Already, Black business owners are cut out of the private financial markets with the Federal Reserve finding that Black business owners are three times less likely to receive all non-emergency funding requested compared to their white counterparts. Furthermore, 80% of Black-owned businesses fail within the first 18 months of operation, primarily due to lack of adequate funding, compared to 30% of all small businesses over the same time frame. SSBCI capital can be the catalyst Black-owned businesses need to survive and thrive in the current economic landscape.
On behalf of the hundreds of thousands of Black business owners that we represent and have in our collective network, these comments express our feedback to the RFI on the Treasury Department’s plan to disburse the remaining $200M in SSBCI TA funding.
Other Comments:
With the consent of the states, Treasury should publish approved state plans.
We would be remiss if we did not strongly advise Treasury to publicly publish each state’s approved SSBCI plan. We fundamentally believe that residents of each state deserve an understanding of how the funding is being disbursed and the thinking behind those plans. Furthermore, without knowledge of what states intend to do with the funds, or promised
Treasury it would accomplish, experts such as us are curtailed in our ability to be helpful and responsive to states that might be struggling.
What criteria should Treasury consider in selecting recipients and sizing awards if Treasury conducted a program to provide competitive TA grants to jurisdictions?
States currently have access to a generous amount of non-competitive SSBCI TA. We have heard from implementing partners that some states are even considering not seeking that funding. Given this, we recommend that any additional funds dispersed on a competitive basis should be highly targeted to those states that are most interested in making their SSBCI programs as equitable as possible.
Implicit in this is a strong recommendation to not be hasty in getting the funds out the door. From our perspective, additional TA to states should be based on need and demonstrated progress made towards the SEDI goals, particularly those with greater track records of effectively meeting the needs of Black entrepreneurs. This way, we can ensure that additional TA dollars are going to those that are truly investing in the spirit and intent of the program.
In terms of distinct criteria for evaluation of the above, we urge you to consider the following when prioritizing which jurisdictions get the additional TA funds:
Jurisdictions that are committed to providing holistic wrap-around services that not only address the various levels of local small business funding needs, but also help connect business owners to free or low-cost accountants, business planning resources, legal services, and other wrap-around resources to ensure businesses have a sustained ecosystem of support.
Jurisdictions that have shown a real commitment to transparency by publicly releasing demographic data – broken out by race, ethnicity, and gender, etc. – on an ongoing and reliable schedule beyond that of Treasury’s annual reports.
Jurisdictions that create and publicly disseminate goals for Black business participation in programming, with plans for improvement where necessary. These goals should be on par with Black population or demonstrated Black business owner need in the state.
Jurisdictions that understand the deep need for cultural competency and therefore prioritize working with Community Development Financial Institutions (CDFIs) and Minority Depository Institutions (MDIs) that can demonstrate a deep track record of meeting the needs of the State’s local Black communities. Cultural competency, or rather the ability to understand, appreciate, and respectfully interact with people from cultures or belief systems different than one’s own, has long been absent in the private, public, and even parts of the non-profit financial sectors.
Jurisdictions that are working across and engaging with regional public, private, and social sectors (e.g., local government leaders, major regional industry representatives, CDFIs and local philanthropies) to understand the diverse – and sometimes conflicting – cross-sector needs and challenges that will either break or make the state’s SSBCI program long-term impact. These partners should be diverse in terms of demographics, but also perspectives and backgrounds.
Jurisdictions that work with local Black communities to educate about the need for data collection, emphasizing that the collection cannot be used to harm their prospects and explaining how the information provided will be kept secure, separated from the funding decision-makers.
What gaps exist in the types and availability of TA to small businesses that seek small business financing?
Support across the business life cycle. Beyond discrimination in the capital markets, one of the other dampening factors on Black businesses being able to access capital at fair rates is the community’s lack of access to legal, accounting, and financial advisory firms. Despite the known linkage between business development and mentorship with business success, McKinsey and Company found that only 58% of Black business owners sought out professional advisory services, citing cost, accessibility, and mistrust as barriers. Just as these resources are critical for setting one’s personal economic success, these kinds of wrap-around services are even more critical at all stages of the business life cycle. Black-owned businesses need affordable professional advisory services provided by people and institutions that have given their local Black communities a reason to trust them.
Analyzing different funding options. There are now more legitimate, regulated, and unique funding methods to support business startup and growth than possibly ever. One thing TA must do within the SSBCI is help Black business owners – who come from an array of backgrounds, including different socioeconomic classes and education levels – thoroughly understand the various funding options available to them to allow them to make the best, most educated decision for their business. This understanding should come in the form of financial literacy about all the options from trusted sources, provided in ways that align with styles of communication and cultural expectations unique to Black founders.
Diversity in equity-based funding. States need to understand that “diversity investing” is good investing. Beyond this fact, when we talk about venture capital (VC) or other equity-based financing (including revenue-based financing), we often make the mistake of only viewing it from the perspective of how it will help the recipient business. The other, even more lucrative side, however, is those doing the investing – the fund managers. While VC funds continue, year-over-year, to break records in fundraising, less than 3% of VC funds employ Black and Latinx investment professionals, meaning that the success of Black-owned firms that are VC-backed will be a financial boon for white, largely male, investors. This simply reinforces the status quo. Therefore, who is investing equity capital matters almost just as much as who is receiving the investment, and states need to seriously consider this if they are looking to set up equity-based financing products through the SSBCI. Black-run equity firms are Black-run businesses and must be included in the effort to craft equity-based products that respond to Black business needs. We further encourage those states with the highest concentrations of Black Americans, which are predominantly southeastern and include Mississippi, Louisiana, Georgia, Maryland, Alabama, and South Carolina, to not only have an equity-based product as a component of their SSBCI product mix but to also take care to partner with Black-led funds in doing so. Numerous resources exist to help states tap into the depth of Black fund and finance professional talent that exists, and we at the SSBCI Black Business Working Group are happy to work with Treasury and states to make those connections.
How can the deployment of TA funding under 12 U.S.C. 5708(e)(1) and (3) most effectively impact VSBs and SEDI-owned businesses in communities throughout the United States?
The most effective way TA funding can be deployed in a way that truly impacts SEDI-owned businesses is to be race-conscious. We understand that programs that exist to undo the harms of past discrimination and, hopefully, lead to an equitable economy, are under attack, with many governments opting for proxies to race that, ultimately, are ineffective at reaching the goal. The fact that the wealth gap is worse now than it was during the Civil Rights Movement proves that. It is the opinion of this group that a problem that was created through explicit racial discrimination can only be rectified with solutions that are explicitly racially integrative.
If Treasury contracted with legal, accounting, and financial advisory firms to provide TA to qualifying SEDI-owned businesses under 12 U.S.C. 5708(e)(3), what types of entities are best positioned to provide TA to address gaps in TA availability?
As you saw above, one of our core criteria for states seeking additional, competitive TA funds is that they connect business owners to free or low-cost accountants, business planning resources, legal services, and other wrap-around resources. The data show that this is the best way to ensure businesses have a sustained ecosystem of support.
With the prospect of Treasury directly contracting with SEDI-owned businesses that provide those services, we recommend tapping into Black-owned businesses within the 8(a) program and those certified by our member organization, U.S. Black Chambers, Inc.’s (USBC), ByBlack initiative. As a complement to certified Black-owned businesses, the entities that are best positioned to provide TA to address gaps in TA availability are those small business TA providers with expertise providing services to immigrant communities, communities of color, low-income communities and other historically excluded communities. Demonstrated expertise reaching aspiring Black entrepreneurs and very small businesses (VSBs), as well as experience advising small business owners with Individual Taxpayer Identification Numbers (ITINs), are also critical to ensure no Black business owners get left behind.
Not-for-profit financial services providers, like community development credit unions and CDFIs (particularly Black-led ones), are a key example of the value of this approach. Many of them provide small business TA, including for VSBs and small businesses that are not yet loan ready. Then, when a business is ready to borrow, they already have a strong relationship with financial services staff who know their business model and can support them through the process and ensure the loan they take out is appropriate for their needs and finances. This approach sets a business up for long-term success.
It is with this knowledge that we further strongly suggest Treasury direct a portion of the remaining funds to CDFIs, Minority Depository Institutions (MDIs), and small business development organizations (including chambers of commerce) that can demonstrate reach into and trust with their local Black communities. CDFIs and MDIs know how to create and underwrite the products that Black-owned businesses need while providing wrap-around services. However, these deep investments – fiscal and otherwise – require capacity and capital. Investing in the portions of the small business ecosystem that have a demonstrated track record of meeting the needs of Black entrepreneurs will help ensure SSBCI capital leads to the long-term sustainability of Black-owned small businesses, especially low income and rural Black business owners who face additional hurdles because of lack of wealth or geographic isolation.
The Working Group stands as a resource with a ready pipeline to meet Treasury’s needs and looks forward to an ongoing conversation about how our pipeline can tap into Treasury’s contract dollars.
How could the Federal TA funding crowd in and leverage private, nonprofit, and philanthropic funds for the same purposes? Are there existing private sector, nonprofit, and philanthropic funded TA services for VSBs and SEDI-owned businesses and how could Treasury’s efforts leverage that funding?
Part of what makes the SSBCI Black Business Working Group unique is its mix of member organizations that provide direct TA to Black businesses and those that have deep private and philanthropic sector connections.
In our experience, the private sector is most willing to fund concrete ideas that can make it easier for the business community to find Black-owned businesses or those that will make sure said Black-owned businesses are “ready” – from the perspective of the private sector – for private investment, either through contracting or direct dollars.
For example, the USBC’s aforementioned ByBlack certification and accompanying Black business directory was made possible through private funding. The Association for Enterprise Opportunity’s (AEO) direct-to-consumer product, myWay to Credit, which is a referral platform that connects small businesses to business mentors and credit options from trusted community lenders, was initially sponsored by the U.S. Treasury’s CDFI Fund, with follow-on financial support from the JPMorgan Chase Foundation. In addition, CDFIs and MDIs receive grants and loans to relend from philanthropic investors, private social investors and mainstream banks. These funds will help leverage SSBCI funds. Through their deep reach into the communities that they serve and their regional partnerships of service delivery, CDFIs and MDIs are well positioned to direct technical assistance funds.
On the other hand, there are gaps that Treasury could take the lead in servicing and helping us make the case for additional private and philanthropic support. For example, the African American Alliance of CDFI CEOs exists because Black-led CDFIs, on average, receive fewer philanthropic and public dollars than their counterparts. This lack of investment – and, in some cases, strategic disinvestment – keeps Black leaders from infusing more capital into their communities. In particular, there is a dearth of organizational capacity grants and other unrestricted funds that are critical to the development of locally based, Black-led organizations. In 2020, we saw a spike in more unrestricted and administrative grantmaking, however, unfortunately, those efforts seem to be losing steam. Promoting or incentivizing this investment for existing, Black-led TA providers will go a long way towards ensuring Black communities can receive what AEO refers to as trusted business guidance, especially if the funding is multiyear.
Finally, at the same time, racial equity dollars do not always flow towards the regions that most need assistance in infusing Black equity into the ecosystem. Another member organization, Hope Credit Union and its related Policy Institute know this firsthand working in low-income communities and communities of color predominantly in the Deep South, where dollars are desperately needed, but leaders do not always seek them. Bringing public, private, and philanthropic funds to the geographic areas where the data support they are needed, but local politicians are not seeking it, should be a priority for Treasury.
These are all considerations for Treasury to keep in mind as it looks to leverage its position with private, nonprofit, and philanthropic funders.
In closing, the SSBCI Black Business Working Group greatly appreciates this opportunity and Treasury’s support of our work thus far. We look forward to keeping an open dialogue with the agency and being a resource to the states as they begin to implement their SSBCI programs.
Sincerely, Members of the SSBCI Black Business Working Group
