LEDC Calls for Participation of Community Development Loan Funds in Proposals Targeting Increased Small Business Lending
FOR IMMEDIATE RELEASE December 1, 2009
LEDC CALLS FOR PARTICIPATION OF COMMUNITY DEVELOPMENT LOAN FUNDS IN PROPOSALS TARGETING INCREASED SMALL BUSINESS LENDING
WASHINGTON – Financially-sound community development loan funds play an indispensible role in helping low to moderate-income small businesses create jobs and should be allowed to participate in executive and Congressional proposals that would expand access to credit for small businesses, the Latino Economic Development Corporation (LEDC) urged today.
In a one-page letter sent to Congressional representatives in the Washington metropolitan area this morning, LEDC Executive Director Manny Hidalgo argues that community development loan funds are the best equipped to increase small business lending in underserved urban communities, one of the key goals of the Treasury Department’s latest small business credit proposal.
Citing the troubling failure of community banks and the need for multilingual, multicultural services for small businesses that are unable to access credit through traditional financial institutions, Hidalgo writes that future iterations of these proposals should give community development loan funds like LEDC greater access to low-cost capital to increase small business lending in low-income or underserved populations.
“A host of cultural, language, and knowledge barriers already limit the participation of many small businesses in the formal financial system,” Hidalgo writes. “The high-risk perception that commercial banks attribute to these businesses has become entrenched during the credit crisis, and we continue to serve many areas that community banks, thrifts, and credit unions do not serve.”
The small business credit proposal released on October 21st by the Treasury Department under the Obama administration’s Financial Stability Plan increases access to low-cost capital for only CDFI-certified community banks, thrifts, and credit unions. A host of Congressional proposals remain pending.
A copy of LEDC’s letter to Congress can be found at www.ledcmetro.org.