Findings

The Congress finds the following: (1)Small businesses in underserved areas have for generations been unable to access affordable credit. (2)The financial crisis of 2008 only served to exacerbate efforts by entrepreneurs to access capital for the purpose of creating jobs and improving economic outcomes in the community. (3)The Create Jobs for USA campaign by Starbucks Coffee Company and Opportunity Finance Network, through community development financial institutions, will provide loans to underserved small businesses and microenterprises to create and sustain jobs throughout America. This will allow Americans to help Americans create and sustain jobs, but will not be enough to help our Nation’s small businesses. (4)Small business investments revitalize communities by creating jobs but also contribute to the local tax base, which helps finance investments in schools, hospitals, infrastructure, and public safety. (5)The Community Development Financial Institutions Fund, an agency of the Federal Government located within the United States Department of the Treasury, has reported that in 2010 alone, community development financial institutions awardees originated loans or investments totaling more than $1 billion, and financed almost 18,000 affordable housing units; more than 5,200 business and microenterprise loans; and created or maintained over 25,000 jobs and leveraged $1.5 billion in private investment. (6)The Community Development Financial Institutions Fund awardees have almost tripled jobs created since 2007, making almost 14,000 loans to small businesses on average each year, representing an average investment of close to $1 billion annually. (7)The Community Development Financial Institutions Fund is well placed to complement the Create Jobs for USA campaign through careful, targeted investments in community development financial institutions for the purposes of improving economic outcomes for underserved families across the country.

Grants to establish loan-loss reserve funds for small business lending

(a)

In general

The Community Development Banking and Financial Institutions Act of 1994 (12 U.S.C. 4701 et seq.) is amended by adding at the end the following:

123.

Grants to establish loan-loss reserve funds for small business lending

(a)

Purposes

The purposes of this section are— (1)to make financial assistance available from the Fund in order to help community development financial institutions defray the costs of operating small business loan programs, by providing the amounts necessary for such institutions to establish their own loan loss reserve funds to mitigate some of the losses on such small business loan programs; (2)to encourage community development financial institutions to establish and maintain small business loan programs that would help provide borrowers access to mainstream financial institutions and combat high cost small business lending; and (3)to encourage community development financial institutions to expand the development services they offer and to serve new investment areas and new targeted populations. (b)

Grants

(1)

Loan-loss reserve fund grants

(A)

In general

The Fund shall make grants to community development financial institutions to enable such institutions to establish a loan-loss reserve fund in order to defray the costs of a small business loan program established or maintained by such institution. (B)

Application

A community development financial institution that wishes to receive a grant under this paragraph shall submit an application to the Administrator in such form and manner and containing such information as the Administrator may require. (C)

Matching requirement

A community development financial institution shall provide non-Federal matching funds in an amount equal to 50 percent of the amount of any grant received under this paragraph. (D)

Use of funds

Any grant amounts received by a community development financial institution under this paragraph— (i)may not be used by such institution to provide direct loans to small businesses; (ii)may be used by such institution to help recapture a portion or all of a defaulted loan made under the small business loan program of such institution on or after the date of the enactment of this section; and (iii)may be used to designate and utilize a fiscal agent for services normally provided by such an agent. (2)

Technical assistance grants

(A)

In general

The Fund shall make technical assistance grants to community development financial institutions to create, support, or maintain a small business loan program. Any grant amounts received under this paragraph may be used for— (i)technology, staff support, staff capacity building, and other costs associated with establishing, supporting, or maintaining a small business loan program; and (ii)establishing, supporting, or maintaining technical assistance programs for borrowers. (B)

Application

Reports

For each fiscal year for which grants are made under this section, the Administrator shall submit a report to the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate containing a description of the activities funded and amounts distributed under this section for such fiscal year, as well as measurable results of such actions. (d)

Authorization of appropriations

(1)

In general

There are authorized to be appropriated to the Fund $25,000,000 for each of fiscal years 2012 to 2017 to carry out this section. (2)

Administrative costs

There are authorized to be appropriated to the Fund $5,000,000 for each of fiscal years 2012 to 2017 for the administrative costs of carrying out this section. (e)

Definitions

For purposes of this section: (1)

Small business

The term small business has the meaning given the term small business concern under section 3(a) of the Small Business Act (15 U.S.C. 632(a)). (2)

Small business loan program

The term small business loan program means a loan program wherein a community development financial institution offers loans to small businesses that— (A)are made in amounts not exceeding $25,000; (B)have no pre-payment penalty; and (C)meet any other affordability requirements as may be established by the Administrator.

(b)

Conforming amendment

The table of contents for the Riegle Community Development and Regulatory Improvement Act of 1994 is amended by inserting after the item relating to section 121 the following:

Sec. 122. Grants to establish loan-loss reserve funds.

Sec. 123. Grants to establish loan-loss reserve funds for small business lending.