ICYMI: U.S. Treasury Department Announces New Efforts to Expand Economic Opportunity for Underserved Businesses and Communities at Annual Freedman’s Bank Forum

U.S. Department of the Treasury sent this bulletin at 10/27/2023 03:43 PM EDT

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U.S. Department of the Treasury

Office of Public Affairs

 

Press Release:             FOR IMMEDIATE RELEASE

October 27, 2023

 

Contact:                      Treasury Public Affairs; Press@Treasury.gov             

ICYMI: U.S. Treasury Department Announces New Efforts to Expand Economic Opportunity for Underserved Businesses and Communities at Annual Freedman’s Bank Forum

WASHINGTON – This week, the U.S. Department of the Treasury hosted its annual Freedman’s Bank Forum featuring U.S. Secretary of the Treasury Janet L. Yellen and senior Biden-Harris Administration officials, as well as key leaders from the public, private, nonprofit, and philanthropic sectors. The conference highlighted the Biden-Harris Administration’s efforts to expand economic opportunity for communities of color and continue to close the racial wealth gap, and included a number of new announcements advance these efforts: 

 

  • The Treasury Department and Economic Opportunity Coalition announced a new goal to secure $3 billion in commited deposits by next Freedman’s Bank Forum from companies for community lenders with a proven record of reaching low-income, rural, and other underserved communities. This is a 200% increase over the $1 billion goal set at last year’s Freedman’s Bank Forum and achieved in June of this year. 
  • The Internal Revenue Service for the first time has committed to spend 19% of its overall procurement on small and disadvantaged businesses in 2024. 
  • The Treasury Department announced a new $75 million competitive grant program, the Investing in America Small Business Opportunity Program, under the State Small Business Credit Initiative to support technical assistance for very small and underserved businesses. 
  • The Treasury Department’s Emergency Capital Investment Program released its first round of reporting which finds that one third of total originations were “deep impact” loans made to the hardest-to-serve borrowers. 
  • The Initiative for Inclusive Entrepreneurship (IIE), a collaboration between the private sector and the Treasury Department that was announced at the 2022 Freedman’s Bank Forum, launched an investment fund to leverage $80 million in private and philanthropic capital to help the Department’s State Small Business Credit Initiative expand access to capital for underserved small businesses. This investment fund, anchored by the Skoll Foundation and the W.K. Kellogg Foundation, is led by Hyphen, Mission Driven Finance, and JumpStart. Others leading implementation of IIE’s capacity-building pilot include Founders First Capital Partners, Next Street, and Nowak Metro Finance Lab. 
  • The Treasury Department released a report providing new evidence that the recovery from the recession caused by the COVID-19 pandemic was the most equitable recovery in recent history. In advance of this report, the Department also released new analysis on how Investing in America initiatives made transformative investments in housing and small businesses, including Latino small businesses. 

 

Below is some of the announcements from this year’s event. 

 

 

Alphabet Inc.’s Google and a coalition of US banks and foundations are pledging to steer at least $4 billion toward small businesses and minority lending institutions, Deputy Treasury Secretary Wally Adeyemo said Tuesday. 

  

The Biden Administration announced a series of measures to boost small and minority-owned businesses ahead of its annual Freedman’s Bank Forum, which focuses on economic opportunity for communities of color. 

 

A group of large banks and foundations called the Economic Opportunity Coalition will commit to securing $3 billion in deposits for lenders that target underserved groups, including rural Americans and minorities, Adeyemo told reporters ahead of Wednesday’s event. The pledge is an increase over the $1 billion commitment the EOC made last year to community development financial institutions and minority depository institutions. 

  

Search giant Google also committed to spending at least $1 billion annually with diverse-owned suppliers in the US, Adeyemo said. Micron Technology, Xcel Energy and Air Products committed to steering 15% of their contract spending on outside goods and services toward small and underserved businesses by 2025. 

 

 

The Biden administration on Wednesday urged big companies to deposit another $2 billion into U.S. community lenders to boost loans to minority and underserved businesses, and asked them to devote 15% of their procurement budgets to such firms.  

   

Chip maker Micron Technology (MU.O), industrial gases producer Air Products (APD.N) and utility Xcel Energy (XEL.O) have agreed to commit at least 15% of their contract spending to "small and underserved" firms, the Treasury Department said. 

 

The Treasury had previously invested nearly $9 billion into Community Development Financial Institutions (CDFIs) and minority-owned banking firms to make more capital available to minority firms.   

 

 

In June, the EOC announced that it had reached the goal made at last year’s Freedman’s Bank Forum and secured $1 billion in committed deposits in CDFIs and MDIs. Today’s announcement includes a 200% increase of this original goal, ensuring billions of dollars will reach low-income, rural, and other underserved communities 

 

The Treasury Department has worked closely with the EOC to maximize the impact of federal investments, particularly in underserved communities that are building infrastructure for sustainable economic development. For instance, EOC investments complement the Department’s more than $8.5 billion in investments to CDFIs and MDIs through the Emergency Capital Investment Program. 

 

Among other things, these funds support CDFIs and MDIs in providing loans, grants, and forbearance for small businesses, minority-owned businesses, and consumers, especially in low-income and underserved communities. 

 

 

U.S. Treasury Secretary Janet Yellen said on Wednesday that $8.5 billion in COVID-era investments in community development financial institutions and minority-owned banking firms will boost lending to Black and Latino communities by nearly $140 billion over a decade. 

 

Yellen said in prepared remarks to the Treasury's Freedman's Bank Forum that early reporting from the investment program indicates that one-third of total originations by recipient lenders were "deep impact" loans made to the hardest-to-serve borrowers. 

 

 

As part of the Investing in America Agenda, the Freedman's Bank Forum is uplifting Black, Brown and under-resourced federal suppliers and small businesses, along with the communities where Black and Brown people live, work and raise their families. 

 

Vice President Kamala Harris recently announced this effort, which the Biden-Harris administration is coordinating in conjunction with the U.S. Treasury Department. 

 

"To bridge the financial disparities that hold so many of our communities back, we must continue to work together to combine the capacity of the private sector with the reach and the scale that only the government can provide." Harris said on Tuesday, Oct. 25 at the Department of the Treasury during the Freedman's Bank Forum 2023. 

 

 

Policy actions taken during the pandemic led to "the most equitable" recovery in recent history, a new government report found. 

 

The study released first to Yahoo Finance on Monday by the Treasury Department found that the president’s American Rescue Plan Act (ARPA), along with actions taken by state and local governments, prevented the worst economic outcomes for Black and Hispanic families during the COVID pandemic, groups that were the hardest hit during that time and have historically been more vulnerable to downturns. 

 

The federal aid — including stimulus checks, rental assistance, and the expanded child tax credit — in combination with local support and the Federal Reserve efforts helped sustain Black and Hispanic household finances, narrow the wealth gap, and improve some economic indicators relative to the pre-pandemic period. 

 

 

Unlike modern recessions that have seen Black and Hispanic workers bear the disproportionate brunt of the downturn, that didn't happen during the pandemic's recession and recovery. 

 

The gap in economic results among racial groups has narrowed in the last three years, making this recovery "the most equitable in recent history," as a new Treasury Department report puts it.  

The median net worth of Black and Hispanic families rose 60% and 47%, respectively, from 2019 to 2022. 

 

The more equitable results reflect the power of fiscal policy to channel money to those who most need it in an economic downturn. 

 

 

The Department of the Treasury has revealed that it invested nearly $22 billion in federal funding across three programs to spur small business growth this year through June. 

 

Treasury said Monday the State Small Business Credit Initiative approved applications for capital programs representing $8.2 billion in potential funding in the first half of the year. The State and Local Fiscal Recovery Funds program has reportedly allocated over $5 billion for more than 1,400 small business development projects. 

 

The department’s Emergency Capital Investment Program also invested over $8.5 billion to help community development financial institutions and minority depository institutions strengthen their efforts to support small businesses and consumers. 

 

 

A Treasury Department bulletin showed that Latino-owned businesses increased in the period between 2019 and 2022. In 2021, for example, nearly 25% of new entrepreneurs in the U.S. were Latino, while the Latino employer experienced a 25% increase in revenue during the pandemic and its subsequent recovery. 

 

The department details how federal investments, including those from President Joe Biden's American Rescue Plan, are growing and sustaining Latino-owned businesses. 

 

With these data, the growth of the Latino community since Joe Biden's term in office is evident. In addition, it reaffirms the contribution that Latinos make to the U.S. economy. 

 

 

“From day one, building a fairer economy has been the centerpiece of the Biden-Harris administration’s agenda,” said Secretary of the Treasury Janet L. Yellen in an exclusive statement provided to theGrio.  

 

“The third Freedman’s Bank Forum under this administration offers an opportunity to reflect on progress made to achieve the most equitable economic recovery in our nation’s history and continue to advance efforts to expand economic opportunity for Black Americans and communities of color across the United States.” 

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