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  • Writer's pictureEdward Lehman

Giving Low Income Communities a Chance


To boost lending in low-income areas of the United States, the Joe Biden administration is providing $9 billion USD in investments and capital infusions to underserved financial institutions across the country.


With the availability of capital, the U.S. Treasury Department opened applications for the Emergency Capital Investment Program, created during the COVID-19 pandemic, and designed to help communities traditionally excluded from the financial system.


Previous federal bailouts placed those institutions in the same category as other, better-connected lending institutions. That left the smaller institutions, many of which have stronger ties to minority-owned businesses, to compete for the limited funds.

The effects of the COVID-19 pandemic on U.S. small businesses amid forced closings, modified re-openings and weakened demand, have exposed "acute" and "deep-rooted" connections between physical and economic health, with the number of active business owners falling by 22 percent from February to April 2020 — the largest drop on record.

Black businesses experienced the most acute decline, with a 41 percent drop. Latinx business owners fell by 32 percent, and Asian business owners dropped by 26 percent.

Volumes of COVID-19 cases coincide with Black-owned business locations. Two-thirds of counties with high levels of Black business activity pre-COVID-19 were in the top-50 COVID-affected areas during the pandemic.

The $9 billion USD in funds will be drawn from the $900 billion USD stimulus package, which Congress passed in December 2020.


Some of the investment program highlights include:

Incentivizing impactful lending: The Treasury’s investments in participating institutions will be at a capped low-cost dividend or interest rate, with no dividends or interest payable or accruing during the first 24 months after issuance. This structure provides an incentive for impactful lending.


Ensuring capital treatment that maximizes program effectiveness: The Treasury is working closely with federal banking regulators to ensure the preferred stock investments under the program qualify for beneficial capital treatment, allowing institutions to leverage capital and maximize lending reach and impact.

Planning for the long term: The Treasury indicated it intends for this program to immediately provide support to community development financial institutions and minority depository institutions, which it said will improve the fiscal health of participating institutions and enhancing real-time impact. Over the long term, the Treasury expects the program to strengthen the viability of these institutions.

AmChamUS supports an inclusive economy, which would contribute to job growth and overall economic prosperity. AmChamUS believes if Black, Latinx and Asian businesses posted similar numbers to non-Black businesses, the U.S. would realize unparalleled economic growth.

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