WASHINGTON (AP) — On the same day the Federal Reserve released a sobering report on the trajectory of the U.S. economy, administration officials highlighted how they’ve kept some of the nation’s smallest businesses afloat. during the pandemic.
About $8.28 billion in relief funds have been disbursed to 162 community financial institutions across the country through the Treasury’s Emergency Investment Program, officials said Wednesday.
These financial institutions in turn offer loans to micro and small enterprises.
The funding scheme, abbreviated as ECIP, is one of several pandemic relief programs designed to support community financial institutions – which provide loans, grants and other assistance to minority-owned small businesses that have difficulties in obtaining financing from traditional banks.
“There’s almost $9 billion on the ground right now” for community banks and lenders, Vice President Kamala Harris said in a call with reporters.
About 96% of black-owned businesses are sole proprietorships and single-employee businesses. They have the hardest time finding financing and are often the first type of business affected during economic downturns.
On the call with reporters, Harris and Treasury Secretary Janet Yellen highlighted some of the program’s beneficiaries, including Native American Bank, which recently secured a $10 million loan to fund a cancer treatment center. opioid addiction in North Dakota, and a Georgia bank that recently gave a $650,000 working capital loan to an Atlanta-based, black-owned affordable housing developer.
Mississippi, Louisiana, North Carolina, California and Texas received some of the largest contributions.
“We’ve long known that too many Americans face significant barriers to participating in our financial system,” Yellen said. “I am pleased that we have reached an important milestone in our work to increase the capital of these underserved communities.”
There were a record 5.4 million new business applications filed in 2021, according to the US Census Bureau, surpassing the previous peak in 2020 of 4.4 million.
Of this number, a growing share are sole proprietors and businesses with no other employees.
“Frankly, a lot of businesses are just recovering from Covid,” Sen. Mark Warner, D-Va., said on the call. He said community banks are “really doing an incredible job of reaching out to small businesses”.
Associated Press reporter Mae Anderson contributed to this report.
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