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CDFI Rapid Response Program – Funding Round Open
The U.S. Department of the Treasury recently announced that the funding round for its Community Development Financial Institution (CDFI) Fund Rapid Response Program (CDFI RRP) is now open. The goal of the RRP is to deliver $1.25 billion to CDFIs to help their communities better respond to the escalating economic crises fueled by the COVID-19 pandemic. Of this $1.25 billion allocation, at least $25 million will be rewarded to certified CDFIs that serve Native American Communities as defined under the notice of funds availability (NOFA).
The program is authorized by the Coronavirus Response and Relief Supplemental Appropriations Act of 2021 (P.L. 116-260), and is in alignment with the Biden Administration’s Build Back Better strategy to advance toward racial justice and equitable and sustainable economic recovery. This direct investment into CDFIs that reach underserved communities is historic, and is the first of more to come later this year by Treasury.
The CDFI Fund certifies mission-driven financial institutions that support economically disadvantaged communities, and also participates in a number of programs that serve to inject new sources of capital into neighborhoods with little to low access to financing. RRP grant funds may be utilized for the following categories of eligible activities: financial products, financial services, loan loss reserves, development services, and capital reserves. The greater of $200,000 or 15% of the grant may be utilized for the following supporting operations: compensation-personal services, compensation-fringe benefits, professional service costs, travel costs, training and education costs, equipment, and supplies. CDFI RRP awards may be utilized for the following eligible lines of business: commercial real estate, small business, community facilities, consumer financial products, consumer financial services, commercial financial services, commercial financial products, affordable housing, intermediary lending to non-profits and CDFIs, and other lines of business per CDFI Fund guidelines. Additional CDFI RRP program details can be found here. As the CDFI Fund is committed to awarding these funds in as quickly as possible, the application will only be open for one month. The historical significance of this funding is not to be missed: This $1.25 billion is the first tranche of $3 billion in total CDFI grant funding, and marks the first of a series of historic investments that the Treasury Department will be making in CDFIs later in 2021.
Application Process and Eligibility
All applications must be submitted to the CDFI Fund by March 25, 2021. Organizations that have been certified by the CDFI Fund as CDFIs as of Feb. 26,2021, the date of the NOFA publication in the Federal Register are eligible to apply for CDFI RRP grants. According to the CDFI Fund, there are 1,229 certified CDFIs as of Feb. 17. Eligible CDFIs must be in compliance with any outstanding CDFI awards and meet benchmarks for programmatic/financial safety and soundness.
Novogradac CDFI service professionals are available to assist CDFIs in applying for RRP grants up to $5 million to support, prepare for and respond to the economic impacts of the COVID-19 pandemic.