Bank of America is a significant player in the Community Financial Institutions (CFI) Program. It has a portfolio of $2 billion in CDFI loans. Moreover, Bank of America also contributes to the CDFI Fund and participates in the Paycheck Protection Program. Consequently, community banks are increasingly involved in the PPP.
Bank of America's portfolio of loans to CDFIs exceeds $2 billion
Bank of America is extending its reach and fueling social and economic progress by providing support to CDFIs. The company has committed $250 million in new capital to these institutions in 2020. It has also made investments of up to $50 million in minority depository institutions. More than 250 CDFIs benefit from Bank of America's support.
The bank operates as a "banker's bank" and most of its lending is through partnerships with community financial institutions. About 50 percent of its $3.9 billion loan portfolio is made through these partnerships. This allows local banks to expand their lending capacity and compete with larger banks.
Community banks operate in 629 counties in the U.S., accounting for nearly one-fifth of all financial institutions. However, by 2011, their number had shrunk to fewer than one-fifth. In the long run, they generally underperform large banks, but they increased their assets by 19 percent over the same period. These institutions are monitored by the FDIC's Advisory Committee on Community Banking.
In June 2008, Merrill Lynch & Co. subsidiaries were the largest PDF borrower. However, they did not use MMIFF. They were also responsible for expanding swap lines with foreign central banks.
Bank of America's contribution to the CDFI Fund
Bank of America has made significant contributions to the CDFI Fund, including $1.1 million that was designated to create a leadership academy for senior management of community development organizations. The leadership academy was created to help improve the skills of community development organization executives. It is sponsored by the Bank of America Community Development Bank and the Bank of America, F.S.B., and is administered by Development Training Institute.
The CDFI Fund was established by Congress in 1994 to help communities rebuild economically distressed neighborhoods. It focuses on revitalizing communities by investing in community development institutions. Programs under this program leverage limited public dollars by building capacity and creating partnerships between community development institutions and mainstream financial institutions. These programs aim to transform a local economy that is underdeveloped into one that is vibrant, competitive, and efficient.
The CDFI Fund provides CDFIs with a platform to raise private capital. Many of the CDFIs are community development banks and credit unions. Others are microfinance institutions. These institutions focus on community development by providing small loans to local entrepreneurs and small businesses. In addition, these organizations often finance affordable housing projects.
Bank of America's contribution to the CDF Fund will help these nonprofits continue to provide critical services to communities in need. The CDFI Fund has awarded nearly $5.2 billion to CDFIs through the CDFI Bond Guarantee Program. By leveraging this money, the CDFI Fund can help more low-income communities grow.
Bank of America's participation in the Paycheck Protection Program
The Paycheck Protection Program is a federal program that helps people with low incomes avoid foreclosure. It has been a vital resource for Americans since it was created during the 2008 recession, and thousands of lenders have participated. Hundreds of billions of dollars in loans have been funneled through the program, including SBA loans. It also provides financial aid to small business owners and sole proprietors to keep workers on the payroll. Its requirements are outlined on the U.S. Treasury website.
While the Paycheck Protection Program has helped borrowers in many ways, the lenders who facilitated it saw it as a revenue booster. In total, the program shepherded $525 billion to small businesses, loans that taxpayers are now forgiving. Lenders that participated in the program include Bank of America Corp., JPMorgan Chase & Co., and Wells Fargo.
Small business owners are desperate to obtain small business loans. However, most banks are not willing to give them the money they need. The Small Business Administration is hoping to make this program more accessible to small businesses by opening its doors to applicants this week. The Paycheck Protection Program is aimed at helping small businesses retain their COVID-19 employees. The new platform makes it easy to apply for the program - the application process can be completed within minutes.
The Paycheck Protection Program was established by the CARES Act and is administered by the SBA. Through the program, small business owners can apply for a loan to cover the costs of their payroll. The money can also be used to cover mortgage payments and rent.