On September 30, 2013, the Treasury Department announced the availability of $325 million in low-cost community development loans issued through the Community Development Financial Institutions (CDFI) Bond Guarantee Program for which tribes are eligible entities. These loans are issued for a term of 30 years and are backed by the federal government. The CDFI Bond Guarantee Program was created through the Small Business Jobs Act of 2010 and this is the inaugural round of this Program.
The CDFI Bond Guarantee Program is administered by the Treasury Department’s CDFI Fund and works as follows:
1. The Treasury Department approved “term sheets” for $325 million in bonds with maturities up to 30 years that, when issued, will be guaranteed by the federal government for the purpose of financing community development and economic development projects.
2. The CDFI Fund has selected three Qualified Issuers to make bond loans available to Eligible CDFIs. The four Eligible CDFIs for this round of the program include: Enterprise Community Loan Fund ; Local Initiative Support Corporation (LISC) ; The Community Development Trust ; and Clearinghouse CDFI. These CDFIs will make low-cost loans available to low-income and distressed communities for Eligible Purposes.
3. Examples of Eligible Purposes include: supporting commercial facilities that promote revitalization and community stability; community facilities; the provision of basic financial services; senior living and healthcare facilities for uninsured or underinsured people; businesses that provide jobs for low-income people or are owned by low-income people; and other community or economic development activity in low-income or underserved urban and rural areas.
4. The CDFI Bond Guarantee Program is structured so that the federal government is repaid for all credit issued. The Program that does not cost the federal government and taxpayers any money.
Lack of access to financing is a well-documented impediment to economic development in Indian Country. The CDFI Bond Guarantee Program is intended to fill the important need in Indian country for low-cost financing and smaller loan amounts than available through traditional bond offerings. The Native American Finance Officers Association (NAFOA) estimates that interest rates will be approximately 3-4 percent for a term of 30 years and that the Qualified CDFIs are intending to make loans ranging in size from $1-4 million for qualified projects. Both the CDFI Fund’s announcement and NAFOA’s announcement are attached.
Please let us know if we may provide additional information regarding the CDFI Bond Guarantee Program.