Source: Shutterstock.A new House Democratic economic stimulus plan would funnel billions of dollars to Community Development Financial Institutions, reauthorize the Paycheck Protection Program and allow marijuana banking.
Those are just some of the provisions contained in the 2,153-page bill, which has formed the basis for renewed negotiations between House Speaker Nancy Pelosi (D-Calif.) and Treasury Secretary Steven Mnuchin.
For credit unions, the bill does not include some provisions trade groups have said are essential, such as an increase in the member business lending cap and a plan to extend temporary changes to the NCUA’s Central Liquidity Facility.
It is unclear where those talks may head, but the Democratic plan with a price tag of $2.2 trillion is worth far less than the $3.4 trillion coronavirus economic stimulus plan the House passed in May.
“This $2.2 trillion Heroes Act provides the absolutely needed resources to protect lives, livelihoods and the life of our democracy over the coming months,” Pelosi said in a letter to Democratic colleagues.
The Democratic talks with Mnuchin still could fail. The Democratic bill contains some hot button issues for Republicans. The bill calls for $436 billion in aid to states, which Republicans oppose. And it does not include business liability protections from coronavirus lawsuits — something that Senate Majority Mitch McConnell (R-Ky.) said the next stimulus bill must include.
The bill also includes a second round of economic impact payments to individuals and families, as well as extended unemployment benefits.
And while the Trump Administration has opposed funding for CDFIs in the past, the administration appears to have reversed that position.
President Trump recently unveiled a Black Economic Empowerment “Platinum Plan” that would “Increase opportunities for small business lending and technical assistance through Community Development Financial Institutions, in order to grow business and create generational wealth opportunities with over $400B in lending.”
The Democratic bill also calls for:
- $1 billion for CDFIs for financial support and technical assistance, and a $2 billion “emergency appropriation” for the institutions.
- Up to $15 billion in PPP loans to be made by CDFIs and other community lenders.
- Dedicating at least 10% of all PPP funding for businesses with 10 employees or fewer, sole proprietors, and the self-employed in low- and moderate-income areas.
- Allowing second PPP loans for certain businesses.
- Allowing businesses that received a PPP loan of under $50,000 to file a simple certification to qualify for loan forgiveness.
- Providing a simple loan forgiveness application for businesses that borrowed between $50,000 and $150,000.
- Clarifying that the SBA will reimburse lenders for a PPP loan five days after the loan is reported as disbursed.
- Providing a temporary moratorium on consumer debt collection on most loans during the pandemic and for 120 days afterward.
- Providing a safe harbor for financial institutions that provide services to marijuana-related businesses if cannabis is legal in the state where business is conducted.
- Establishing a Neighborhood Capital Investment Program that would provide long-term direct capital investments for CDFIs and Minority Depository Institutions.