can cdfis apply for ppp?

As currently being implemented by the Small Business Administration (SBA), the loans made available through the $349 billion Paycheck Protection Program (PPP), part of the CARES Act recently enacted to address the COVID-19 crisis, are likely to significantly bypass smaller small businesses and those that are minority- or women-owned. The problem is that the SBA is running the program through banks that are existing SBA lenders, and many of these banks are choosing to serve only customers with existing business accounts and loans. This will exclude the many small businesses not currently served by SBA Lenders—disproportionately smaller, minority-owned, and women-owned businesses. Even if the SBA expands the program to include all federally insured depository institutions, most of these institutions are not well-positioned to serve this large group of firms that are critical to the American economy. An effective way to reach these businesses is to allow certified Community Development Financial Institutions (CDFIs) to disburse SBA PPP loans, and, going beyond PPP loans, to provide special funding that they can deploy to hard-hit communities through other loans and investments.

Small, women-owned, and minority-owned businesses are a critical part of the American economy:

A substantial literature documents that small firms, minority-owned firms, and women-owned firms struggle to access bank financing.1 Overall, the volume of bank loans under $100,000 to small businesses has declined by 48 percent from 2007 to 2018 (source: analysis of FFIEC CRA lending data). Instead, these businesses have been increasingly reliant on high-priced financing from credit cards or online “fintech” lenders, as well as CDFIs. As a result, few of these firms have existing borrowing relationships with the banks who have been selected to administer the SBA Paycheck Protection Program. These dynamics raise serious questions about whether one of the most vulnerable sectors of the U.S. economy will also miss out on the assistance it needs.

CDFIs provide an effective alternative route through which aid could be channeled to these businesses. From 2015 through 2017, CDFIs made over 31,000 loans to small businesses with 5 or fewer employees—and coupled this affordable financing with hands-on technical assistance to help businesses succeed. A previous Carsey School of Public Policy evaluation of the CDFI program found that CDFIs targeted over 80 percent of their loans to businesses that were either minority-owned, women-owned, and/or located in economically distressed areas—ranging from rural to urban. The same evaluation also found that during the last recession, just as mainstream financial institutions pulled back from lending, CDFIs actually “stepped into the breach” and significantly grew their lending activity. The CDFIs were able to do this while remaining financially strong.

A simple policy solution to increase the effectiveness of the SBA PPP would be to allow certified CDFIs to disburse SBA PPP loans. This would allow CDFIs to serve community-oriented small businesses, helping them to continue to employ thousands of people—something that they will not be able to do without assistance. Without this bridge to a post-COVID-19 existence many of these businesses will fail, removing important pillars on which their communities depend.

A further step, beyond the SBA PPP program, would be to provide special funding that CDFIs could target to particularly hard-hit, hard-to-reach, communities—irrespective of firm size. Only recent grant awardees are required to report data to the CDFI fund, but these data suggest that CDFIs could easily deploy over $10 billion in loans to businesses, nonprofits, and low-income communities. The 235 CDFIs reporting data to the CDFI fund—just a fraction of the over 1,000 CDFIs across the country—made over $7.5 billion in loans in 2017, the most recent year for which data are available (source: CDFI Fund data). That $10 billion dollars, or more, would provide assistance to small businesses not well served by the current program, and also stabilize a full range of ventures and projects from affordable housing to schools, health clinics, and community facilities.

1. See, for example: https://www.mbda.gov/sites/mbda.gov/files/migrated/files-attachments/DisparitiesinCapitalAccessReport.pdf https://www.nwbc.gov/2018/03/01/the-latest-report-from-the-national-womens-business-council-on-women-business-owners-access-to-capital/ https://ilsr.org/rule/financing-local-businesses/

Eric Hangen is a senior research fellow at the Center for Impact Finance at the Carsey School of Public Policy.

A new carve-out in the $285 billion federal PPP package signed into law last month includes $15 billion in funds for CDFIs to access.

But problems loom because of the way CDFI business models are structured. Many do not have the requisite capital on hand to lend to their clients. Unlike larger banks, CDFIs must raise capital from outside sources before they can lend. If a CDFI doesn’t have the money, it can’t tap the new PPP loan pool.

“There’s a misconception that because we’re a PPP lender that the government has given us money to lend. It doesn’t work that way at all,” Lee said. “We have to raise our own capital first, then lend it and then ask for forgiveness to get the capital back.”

As community lenders explain, because the first two rounds of PPP funding required CDFIs to do so much lending—millions more than they normally do—an entirely new round of fundraising must commence just to start the process again.

“Where do I get the money? I had to raise $6 million the first time I did it,” Quintero explained. “I haven’t gotten it forgiven, and I have to get another $6 million now.”

There are now fears among CDFI executives that while $15 billion has now been carved out, the money could languish along with the hopes of minority business owners as a result of the capitalization crisis.

“I need capital to deploy. Without that, my effectiveness is limited,” said James Bason, president of TruFund Financial Services Inc., a CDFI that works with the Brooklyn Chamber of Commerce.

Because of the complex forgiveness provisions for PPP loans set by the Small Business Administration and the Treasury Department—some of which weren’t even made final until October 2020—many CDFIs have been left holding the bag on millions in debt that is still being processed by the SBA.

“We put out $14.9 million in borrowed capital and because of the current forgiveness process we have not been able to repay the debt we borrowed to achieve that,” Bason said.

To understand the dire state of forgiveness, as of Nov. 22, 2020, lenders have made 55,144 forgiveness submissions for the amount of $83.2 billion, according to the SBA's figures. But more than $669 billion in PPP was allocated into law by Congress.

“The SBA was relatively slow to turn these applications around,” said Tom McHale, president of Pursuit Lending. “The volume of forgiveness applications they’ve seen has been tremendous.”

The Federal Reserve initiated a massive lending window aimed under its PPP Liquidity Facility for nondepository institutions, one that ostensibly would be used to facilitate more loans to smaller banks and lenders.

But according to CDFI leaders, the Fed’s window is largely useless because CDFIs need to raise the money before the Fed backstops it.

“It still requires us to put up the capital first,” Lee said. “We make the loan, then we take the loan and give it to the Fed as collateral, and then they give us money back.”

Other CDFI executives don't see as much doom and gloom.

Here is the PPP lenders list to identify which financial institutions can offer this financial aid again. However, you must know that the Paycheck Protection Program ended on May 31, 2021.

If you need small business finance, you can still apply for a business loan with us.

As of April 2021, the Paycheck Protection Program (PPP) has loaned out $788 billion to over 8.5 million small businesses across the United States.

The program has helped many businesses afloat during the COVID-19 pandemic.

No! The PPP expired on September 30, 2021, but Congress has legislation pending that would extend the program through 2022.

If the government passes this legislation, businesses will be able to make PPP loan applications through December 31, 2022.

The government extended the terms of the PPP once in October 2020.

At that time, the Department of The Treasury increased the maximum loan amount from $10 million to $20 million.

It is possible that the loan terms could be further extended or modified if they extend the program again.

If Congress extends the program, it will provide much-needed relief to businesses that are still struggling to recover from the pandemic.

Camino Financial is the first neo-CDFI in the United States. That means we are the first-ever AI-powered CDFI. We use the power of technology to offer the financial services economically disadvantaged communities need.

As a CDFI, we help low-income communities nationwide through our financial services.

We offer financial products that are affordable and easy to get. With us, you can get:

At Camino Financial, we are one of the few lenders that provide financing for business owners that only have an ITIN and haven’t established a credit history yet.

To get more info about capital, you can:

You can also use our business loan calculator to see how much you’d pay monthly with our loan programs and qualify today!

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Find here the best PPP lenders that offered the SBA’s Payroll Protection Program and possibly do in the future.

The organizations offered these loans but they also gave assistance and helped applicants fill out their applications.

Here’s a Community Development Banks List and different PPP loan providers in California.

This CDFI is in San Diego, CA.

They help businesses in California.

To get more info, you can:

This CDFI is in Aptos, CA

They help businesses in California.

They offer Spanish customer service.

This PPP loan provider is in San Jose, CA.

They help businesses in California.

They offer Spanish customer service and individual CDIF PPP applications or technical assistance.

This CDFI offered PPP loans in Laguna Hills, CA.

If you want to be aware of this PPP loan lender, you can get info only on their website.

This CDFI is in Ithaca, NY.

They help businesses in New York.

To get more info, you can:

This bank in New York received PPP loan applications.

If you want to apply, you could visit their website to keep updated: https://www.unionbank.com/.

This CDFIs is in New York City, NY.

They help businesses in New York.

To get more info, you can:

This CDFI is in Brooklyn, NY.

They help businesses in New York.

To get more info about capital, you can:

This CDFI is in Elmsford, NY.

They help businesses in New York.

To get more info, you can:

This CDFI is in New York City, NY.

They help businesses in New York.

To apply, you need to fill out an interest form on the website available in English and Spanish (Currently, the form is closed):

Renaissance EDC – PPP Loan Interest

To get more info, you can:

They offer Spanish customer service and individual PPP technical assistance.

These community financial institutions or PPP lenders are in Austin, TX.

They help businesses in Texas.

They offer Spanish customer service and individual PPP technical assistance.

PeopleFund is in Austin, TX.

They help businesses in Texas.

To get more info about PPP loans, you can:

Note: They have a voice mail available so you can leave your information, and they call you.

This CDFI is in Lake Forest, CA.

They help businesses in Arizona, California, Nevada, and New Mexico.

To get more info, you can:

This CDFI is in Los Angeles, CA.

They help businesses in California, Georgia, Maryland, and Pennsylvania.

To get more info, you can:

This Community Financial Institution is in West Sacramento, CA.

They offer to fund businesses in Arkansas, Arizona, California, Colorado, Hawaii, IDAHO, Montana, Nevada, New Mexico, Oregon, Utah, Washington, and Wyoming.

To get more info and their application process, you can:

This CDFI is in San Antonio, TX, and they will help you to access funding:

They help businesses in Alabama, Arizona, Florida, Georgia, Kentucky, Louisiana, Mississippi, Missouri, New Mexico, Oklahoma, South Carolina, Tennessee, and Texas.

To get more info, you can:

Note: They have a voice mail available to leave your information, and they call you.

DreamSpring is in Albuquerque, NM.

They help businesses in Arizona, Colorado, Georgia, Nevada, New Mexico, North Carolina, and Texas.

They offer Spanish customer service and individual PPP technical assistance.

Colorado Enterprise Fund is in Denver, CO.

They help businesses in Colorado.

They offer Spanish customer service and individual PPP technical assistance.

Black Business Investment Fund is in Orlando, FL.

They help businesses in Florida.

To get more info, you can:

Pursuit is in New York City, New York.

They help businesses in New York, New Jersey, and Pennsylvania.

They offer Spanish customer service and individual PPP technical assistance.

Note: Recorded message states to email [email protected] for the quickest way to get help.

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Let’s go over some of the basics that’ll help you understand these institutions and how and why they offered PPP loans.

One of the key features of the PPP Lenders is the ability to get funding in as little as 24 hours. This can be a lifesaver for small businesses struggling to make ends meet and need quick access to cash.

Another key feature of the best online PPP lenders is that they often have flexible repayment terms.

Instead of being locked into a rigid repayment plan, you can choose a repayment schedule that works best for your business.

These lenders typically have lower interest rates than traditional banks.

This can save you money on the overall cost of the loan, making it more affordable for your business.

A Community Financial Institution (CFI) is a financial institution in an economically underserved community.

CFIs offer financial services to these communities.

There are three types of CFIs:

A Community Development Financial Institution helps revive economically distressed communities throughout the United States, commonly referred to as CDFIs.

These specialized financial organizations reach underserved communities (like disadvantaged people in primarily black and Hispanic communities) through their development services, affordable loans, and financial assistance.

Some also help obtain affordable housing.

There are different types of Community Financial Institutions, depending on their characteristics:

CDFI loans are financial products for small businesses and home buyers. They’re meant to help low-income communities. Most, if not all, of the institutions in our CDFI PPP lenders list offer traditional business loans.

MDIs (Minority Depository Institutions) are banking institutions that primarily service predominant minority communities including Black, Asian, Hispanic, and Native Americans, as defined by the FDIC.

Certified Development Companies (CDCs) are SBA-regulated nonprofit organizations. They work with lenders to offer 504 loans and promote economic development.

These community development financial institutions (PPP) want to ensure that impoverished communities gain access to funding.

Their mission became even more important when the coronavirus pandemic started wreaking havoc on small businesses’ finances.

The government also realized this and allowed CDFIs to become PPP lenders during the second PPP funding round.

PPP loan applications were available online or through an SBA preferred lender (CDFIs, banks, or other financial institutions).

The application required information about:

Some financial institutions had extra requirements, like only helping people with an existing business checking account. Other banks helped new and existing customers.

What has made CDFIs and PPP loan companies different is that you didn’t need an existing relationship to complete an application with them.

If you want to locate one of these institutions, here’s the best way to do it:

Use this CDFI locator to find a financial institution in your state. The search engine provides a list of CDFI participants and contact information.

These institutions are in every state and the District of Columbia, Guam, and Puerto Rico.

There aren’t as many MDIs as CDFIs, but this list narrows down the closest MDI near to you.

While a part of the second round of PPP money was set aside exclusively for CDFIs and MDIs to reach underserved small business owners, your Local CDFI or MDI may have exhausted the amount allocated to them for PPP or aren’t participants.

However, the 2021 Consolidated Appropriations Act appropriated additional funding for low-income communities, such as the Economic Injury Disaster Loan (EIDL).

With the EIDL loan, you could receive up to $150,000 with restricted usage for working capital. Repayment terms depend on the business’s ability to repay with a maximum repayment term of 30 years.

The Small Business Administration also offers a microfinance loan program for loan amounts up to $350,000.

CDFIs or MDIs may have access to other types of funding so your business can continue to operate.

When lenders were accepting PPP loans, financial institutions didn’t give many minority-owned businesses funding in the initial round.

Their net profit may have been too small, or banks deemed they didn’t have enough employees.

However, the second draw of PPP loans offered funding through Community Development Financial Institutions (CDFIs) and Minority Depository Institutions (MDIs) to help BIPOC-owned small businesses (Black, Indigenous, and People of Color) receive the funding they needed to survive the pandemic.

The Consolidated Appropriations Act signed into law on December 27, 2020, set aside money for CDFIs and MDIs.

Therefore, the government earmarked nearly $3 billion for underserved communities.

Additionally, the SBA will develop a new formula so that small businesses can qualify for larger loans.

CDFIs have personnel specializing in providing the best possible financing to help your business. That makes them very attractive financing alternatives for business owners.

But even if you found an institution near you in our t, you won’t be able to get a Paycheck Protection Program loan because the program is no longer active.

We recommend you apply for traditional financing.

If the following statements apply to your business, you are eligible to apply for your first PPP loan in 2021.

If the following statements apply to your business, you are eligible to apply for your second PPP loan in 2021.

A 25% or greater reduction can be shown in one of two ways:

For example, if a business wants to use the second quarter (Q2) of 2019 where they recorded $20,000 in gross revenue, they are eligible if they recorded a gross revenue of $15,000 or less in Q2 2020.

Further reading: How to Calculate a 25% Reduction in Revenue for PPP 2

If any of the following statements apply to your business, you are not eligible for any PPP loan.

If the PPP loan application for independent contractors is unchanged for 2021, you will need a tax-ready 2019 or 2020 Schedule C from your personal Form 1040 tax return. While it does not have to be filed, it must be complete and accurate. You will need all your 1099-MISC forms (which are 1099-NEC forms in 2020) handy in order to complete your Schedule C.

You must have reported a net profit on your Schedule C in 2019 or 2020.

Further reading: Self-Employment, 1099s, and the Paycheck Protection Program

If the PPP loan application process for sole proprietors is unchanged for 2021, you will need a tax-ready 2019 or 2020 Schedule C from your personal tax return. While it does not have to be filed, it must be complete and accurate.

You must have reported a net profit on your Schedule C in 2019 or 2020.

If you also have employees on payroll, you do not need a net profit, but you must have payroll tax forms 940 and 941/944 for 2019 or 2020.

Individuals should not submit separate applications, but only submit one PPP application on behalf of the partnership.

If you also have employees on payroll, you should have payroll tax forms 940 and 941/944 for 2019 or 2020. The SBA guidelines allow for payroll processor records containing equivalent payroll tax information, but your lender may not accept those.

PPP loans also provide coverage for the partners that can’t take a salary. You can include their self-employment earnings as reported on their Schedule K-1 capped at $100,000 and multiplied by 0.925

Further reading: PPP Loans for Partnerships: What You Need to Know

Only S corps who have payroll are eligible for the PPP. If you were only paid through owner draws or distributions and did not pay payroll tax, you have no payroll costs to report and the PPP is not suitable for you.

If you also have employees on payroll, you should have payroll tax forms 940 and 941/944 for 2019 or 2020. The SBA guidelines allow for payroll processor records containing equivalent payroll tax information, but your lender may not accept those.

Only C corps who have payroll are eligible for the PPP. If you were only paid through owner’s draws or distributions and did not pay payroll tax, you have no payroll costs to report and the PPP is not suitable for you.

If you also have employees on payroll, you should have payroll tax forms 940 and 941/944 for 2019 or 2020. The SBA guidelines allow for payroll processor records containing equivalent payroll tax information, but your lender may not accept those.

You will need to have run payroll in 2019 or 2020 to qualify for the PPP. Faith-based organizations should also consult the SBA’s guidance on eligibility.

On January 6, 2021, the SBA released two sets of guidance: one for first draw PPP loans and another for second draw PPP loans.

PPP loan applications for both first and second time borrowers are open now.

Check in with your lender for information on how to submit an application with them.

Further reading:

There are lots of other funding options out there! You can check out some of your options below.

A final note: all businesses are unique and it’s possible that this article did not fully cover your situation. If your situation is more complicated, a consultation with a CPA or your lender is highly recommended.

If you don’t qualify for the PPP but still need cash flow to keep your operations going, here are resources we recommend looking into.

You can be eligible for payroll tax credits if you keep your employees on payroll, if you paid COVID-19-related sick leave for employees, or if you had to suspend operations.

Further reading: Employee Retention Credits: A Simple Guide (COVID-19)

The federal government is providing up to $600 to eligible individuals. You can check the status of your payment at the IRS Get My Payment site.

Self-employed individuals and independent contractors are eligible for unemployment benefits if they find themselves unemployed, partially unemployed, or unable to work due to COVID-19. Visit your state’s Department of Labor site to apply.

Further reading: Unemployment Benefits and the CARES Act

Banks, merchant processors, and other private lenders may offer lines of credit or other lending options. But the terms won’t be as favorable as the PPP and EIDL. Note: some of the below offers may have been changed due to COVID-19.

We’ve compiled our recommendation of the best bank loans for small businesses in 2021.

A line of credit is more flexible than a bank loan, and usually cheaper too. Here’s our recommendations of the best business lines of credit in 2021.

Using a credit card to float your business is usually a bad idea. However, some business credit cards offer 0% interest for the first year. Check out our recommendations for the top business credit cards to see if any fit your needs.

The government also realized this and allowed CDFIs to become PPP lenders during the second PPP funding round. CDFIs have one advantage over banks and credit unions. They can offer more personal customer service because they're smaller and closer to their communities.