Rep. Maloney Fights for Small Business Growth in Developing Communities

Apr 28, 2016
Press Release
Congresswoman introduces new bill to provide support for Community Development Financial Institutions

WASHINGTON, D.C. – Congresswoman Carolyn B. Maloney (NY-12) introduced legislation today in the House of Representatives to give small businesses in developing communities more access to affordable credit. H.R. 5113, the Investing in America’s Small Businesses Act of 2016 would provide grants to Community Development Financial Institutions (CDFIs) to establish loan-loss reserve funds for small business microloans under $50,000, allowing CDFIs to leverage private investments to expand their small business lending programs. These small loans give businesses additional working capital with no pre-payment penalties, allowing small companies to invest in new equipment or supplies that they need in order to grow.

“Small businesses are critical engines of economic development and job creation,” said Rep. Maloney. “In underserved communities, businesses owners are too often unable to access the credit they need in order to grow. The Investing in America’s Small Businesses Act will address this problem head-on by expanding options for these small businesses to obtain the affordable working capital they need to succeed and expand.”  

The Investing in America’s Small Businesses Act of 2016 is strongly supported by the CDFI community, with endorsements from CDFI Coalition, the lead national organization in the United States promoting the work of CDFIs; and the National Federation of Community Development Credit Unions, a national network of credit unions organized by and for underserved communities.

“Community Development Financial Institutions (CDFIs) provide financial products and services to economically distressed communities and individuals not typically considered bankable by traditional financial institutions, empowering them to become self-sufficient stakeholders in their own future,” said James R. Klein, CDFI Coalition president and CEO Emeritus of Finance Fund. “Congresswoman Maloney’s bill will help CDFIs defray the costs of financing small businesses by establishing loan-loss reserve funds. The Coalition is pleased to see these efforts, which would permit more financing to flow to small businesses located in areas needing investment and jobs.”

“Passing the Investing in America’s Small Businesses Act of 2016 is a specific action that Congress can take to bolster America’s economy while supporting underserved communities,” said Kathleen Mohan, National Federation of Community Development Credit Unions’ president and CEO.  

According to a  2013 U.S. Small Business Administration study, ”the major constraint limiting the growth, expansion, and wealth creation of small firms—especially women- and minority-owned businesses—is inadequate capital.” CDFIs serve exactly these communities—with great success and economic benefit. A 2014 Darden School of Business report found that CDFI banks and credit unions had virtually the same level of performance as mainstream financial institutions. Despite this demonstrated success, CDFIs often lack the capital to meet the needs of many promising small businesses.

While private sector financial institutions have recently stepped in to assist CDFIs in their mission to provide affordable, responsible lending to underserved communities, private sector investments are not enough to address the significant need for small business credit in underserved communities. Research shows that minority-owned businesses typically encounter higher borrowing costs, receive smaller loans and see their loan applications rejected more often. CDFIs are well-placed to provide struggling small businesses and entrepreneurs in underserved communities access to affordable credit through microloans.


  • The Investing in America’s Small Businesses Act of 2016 authorizes $25 million to the Community Development Financial Institutions Fund to provide grants to CDFIs for the purpose of establishing loan-loss reserve funds to defray the costs of a small business loan program.
  • The bill authorizes $2 million for administrative costs.
  • Small business loans backed by a grant from this program may not exceed $50,000.
  • CDFIs must provide non-federal matching funds equal to 50% of the grant received.
  • Funds may be used to recapture losses for a defaulted loan from a small business loan program after the law has been enacted.
  • Funds may not be used to provide direct loans to small businesses.
  • The Investing in America’s Small Businesses Act was first introduced as H.R. 3635 in the 112th Congress.