Fueling the economy isn’t just reserved for large urban neighborhoods or suburban towns. In rural areas, making more loans available can help address important economic and social issues.
Bank of America teaming up with the United States Department of Agriculture (USDA) to create a relending program that provides more than $400 million in long-term, low-cost financing for community development financial institutions (CDFIs).
The partnership will focus on promoting employment, education, health and housing outcomes for families of impoverished rural and Native American communities. It will be facilitated through the Uplift America Community Facilities Relending Program. Between, the construction of schools, health care centers, child care facilities and more, this program will give communities with limited infrastructure development and persistent poverty the opportunity to develop much needed services.
“This effort builds on our commitment to lifting up the economic prospects of communities that have not benefited from the revitalization of rural America," said Secretary of Agriculture Thomas Vilsack. "By engaging with local and national partners, private sector financial institutions and philanthropic organizations, USDA will inject a game changing level of investment capital to reduce poverty in targeted rural areas where the capacity for growth has not been realized.”
An example of this type of transformative funding can be seen first-hand in Kelso, Washington where a community-needs assessment identified a shortage of health and homeless care services. Morbidity and mortality rates for chronic health conditions are high, childhood immunization rates are low and access to dental care remains a significant problem. In response, a local nonprofit Cowlitz Family Health Center built a Kelso facility that offers primary medical care, behavioral health, case management and outreach services. Cowlitz Family Health Center contacted Craft3, a local CDFI, for financing. Craft3 provided a loan for tenant improvements, equipment, furnishings and working capital. It’s investment in Cowlitz Family Health Center strengthened economic and family resilience by supporting economic growth and opportunity, and strengthening access to essential services. With help from Craft3, this nonprofit organization created 12 full-time jobs, leveraged $650,000 in additional project funds for the clinic and assisted 6,000 low-income families.
Under the new relending program, 26 community lenders and CDFIs, nonprofit private-sector financial institutions that provide credit and financial services to underserved populations, were approved for more than $400 million of USDA funding. Bank of America has guaranteed up to $100 million, removing this extra step for CDFIs to guarantee funding and ensuring that low-cost capital is more easily accessible to rural communities.
“By leveraging the work we do with CDFIs, we’re helping to facilitate the investment of much needed capital resources in impoverished neighborhoods to build stronger local economies, said Andrew Plepler, Global Environmental, Social and Governance executive at Bank of America. “We are proud of our partnership with the USDA and look forward to seeing the positive impact this funding will have on communities across the nation.”
Bank of America is the largest investor in CDFIs among major financial institutions, investing more than $1 billion in more than 240 community lender partners across all 50 states, the District of Columbia and Puerto Rico. Bank of America Charitable Foundation has committed $1 million to help cover increased program and operational costs of community lenders and CDFIs participating in the program. There are currently $22 million in funds made available by seven foundations, including the bank’s foundation.
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