2021 CSBS Community Bank Case Study Competition Journal

2021 COMMUNITY BANK CASE STUDY COMPETITION

small businesses in low-and moderate-income markets. Invited onto a call with President Trump, Treasury Secretary Mnuchin and CEOs of the largest U.S. banks after the first PPP loan round faltered, CEO Darrin Williams heard major institutions’ CEOs speaking ahead of him acknowledge that rural and small borrowers were not actually their customer base, and CDFIs should be considered as a better channel. As the only CDFI representative and the only Black CEO on the call, Darrin was able to provide evidence of impact Southern and other CDFIs were already having reaching communities and consumers outside the focus and beyond the reach of the larger institutions. He explained how small loans were lifelines for small businesses, and CDFIs were better equipped to deliver capital to underserved communities that were disproportionately affected by the pandemic. This new policy shift was announced in May 2020, which designated SBB unexpectedly had the opportunity to significantly influence national policy toward helping steer PPP funds through CDFIs toward small businesses in low-and moderate-income markets.

$10B of PPP funds to be allocated to financial institutions. This amount included $3.2B for loans already approved by CDFIs in April 2020. An additional $6.8B was granted to help the small businesses in low-income areas maintain their payroll to preserve jobs for those most in need. On an April call, the White House and Treasury convened with business leaders and CEOWilliams stated: Mr. President, this paycheck protection program is a bold and aggressive program. It’s been exactly what’s intended. It’s putting Americans back to work. The place that we serve, that is desperately needed. We appreciate it very, very much. As a CDFI, 60% of our leading activity must take place in low- and moderate-income communities. These communities are hurting. People are laid off and they all lack sufficient savings. Typically, in an economic downturn, cuts and lower wealth communities are deeper and last longer than the wealthier communities. My bank and other CDFIs across America have been working day and night since the program opened on Friday processing applications for both customers and non-customers. Less than a month after this meeting, the new policy for additional CDFI funds was approved by the Treasury Department, and the role of CDFIs has continued to grow over time. In February 2021, President Biden implemented a reform to the PPP for these businesses (White House). The administration stated that 98% of small businesses have less than 20 employees, and this new policy focused relief to those companies. The reform created a period where only businesses with fewer than 20 employees

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