April 5, 2020
To: The Chief Executive Officers or the Equivalents of New York State Regulated Institutions
The New York State Department of Financial Services (Department) is issuing this letter relating to funding of Community Development Financial Institutions (CDFIs), in implementing the Paycheck Protection Loan Program created recently by the enacted Coronavirus Aid, Relief and Economic Security Act, as part of the U.S. Small Business Administration’s 7(a) Loan Program.
As you are aware, COVID-19 pandemic has created and extraordinary global health and economic crisis, which has severely adversely impacted New York State communities, its small businesses and economy.
CDFIs are mission-driven financial institutions that create economic opportunity for small businesses and consumers, and play a critical role in promoting access to financing to low and medium income communities. CDFIs can help banking and other financial institutions reach and serve the needs of underserved populations and communities because they have access and expertise in serving these communities and geographies.
An important part of responding to this unprecedented crisis is fostering an opportunity for partnering with CDFIs to bring together the collective networks and expertise to achieve a greater impact.
The partnership will enable your institutions deliver lending products that may be outside of your institutions’ business models or operations, and enhance the borrowers’ ability to navigate through the loan application process and use credit effectively.
The Fiscal Year 2021 Enacted Budget of the State of New York provides for an investment of $25 Million in new funding over five years to support New York’s Community Development Financial Institutions Fund to assist CDFIs in strengthening their small business lending and technical assistance services. This is a valuable tool that will enable CDFIs respond promptly to the crisis that small businesses in New York are currently facing.
Additionally, your continued support of small businesses, whether directly or through partnership with CDFIs, will provide emergency loans to small businesses which employ most of our workforce and serve a critical role in our economy.
The Department strongly encourages all its regulated institutions to provide funding and grants to CDFIs and other mission-driven lenders so they can increase and enhance their lending capacity and help small businesses that are in urgent need of capital and funding. Without such funding and grants, many of these businesses will not survive, which will adversely impact New York’s economy.
The Department recognizes and appreciates all the support that your institutions are currently providing to the hard-hit small businesses and communities in New York and commends you for any assistance that you can provide them so they can navigate the current health and economic crisis.
Linda A. Lacewell, Superintendent
New York State Department of Financial Services