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Obama Administration Announces enhancements for TARP Initiative for Community Development Financial institutions


Obama Administration Announces enhancements for TARP Initiative for CDFIs

In October, President Obama announced a new program under the Troubled Asset Relief Program (TARP) to invest lower-cost capital in Community Development Financial Institutions (CDFIs) that lend to small businesses in the country's hardest-hit communities. Under this program, CDFI banks, thrifts and credit unions – which have been certified by Treasury as targeting more than 60 percent of their small business lending and other economic development activities to underserved communities – would be eligible to receive capital investments at a dividend rate of 2 percent, compared to the 5 percent rate that was offered under the Capital Purchase Program (CPP).

Key Terms and Enhancements to TARP Initiative to Support CDFIs

  • As Announced in October, Lower-Cost Capital Available to CDFIs at 2 Percent Rate
  • Increase the Maximum Amount of Capital Available to CDFIs
  • Provide Capital from Treasury to Match Private-Sector Investments 

Today, in conjunction with a meeting between Secretary Geithner, Members of Congress and other leaders in the CDFI community, the Treasury Department is announcing final terms for this new program. These terms – developed following extensive consultation with small businesses and CDFIs across the country – include enhancements that will help better support CDFIs and make credit available to small businesses looking to expand and create jobs.

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