§4707 Assistance Provided by Fund

Summary

The Fund can give money and help to community development financial institutions. It can make equity investments, deposits, credit union shares, loans, and grants. It can also give technical help directly, by grants, or by hiring experts. The Fund may not own more than 50 percent of a recipient’s equity and cannot run the institution. Any equity it holds must be transferable and nonvoting, though it can be converted to voting stock if the Fund later transfers it. Deposits in insured institutions need no collateral. The Fund may only make direct loan obligations if Congress has already provided the budget authority to cover their cost. Money from the Fund can be used to support things like commercial projects, small businesses that help low-income people, community facilities, basic financial services, affordable housing for low-income people (with limits on homeownership assistance), and other activities the Fund approves. Technical help can fund training and product development and can go to institutions that do not get financial help. Normally a single institution and its affiliates may get up to $5,000,000 total in any 3-year period. An existing institution can get up to an extra $3,750,000 in the same 3-year period to create a new subsidiary that serves a new state or metro area if the new entity independently meets selection rules and no other recent application exists. The Fund can give money all at once or over time. Non-technical grants or loans must be matched dollar-for-dollar with nonfederal funds before the Fund pays, though the Fund may reduce or change the match for very small, rural applicants with assets under $100,000 requesting $25,000 or less. No more than 25 percent of yearly Fund disbursements may use that reduced match. The Fund must make sure unregulated recipients are financially and managerially sound, require audited financial statements at least every 18 months, set performance goals in an assistance agreement, and may impose sanctions (like changing goals, cutting off funds, or requiring repayment) for fraud or noncompliance. The Fund may sell its investments or loans but keeps enforcement power until performance goals are met. Nothing here limits federal banking regulators from supervising or regulating institutions.