In an effort to give small entrepreneurs in underbanked communities better access to capital, New York Governor Kathy Hochul announced Thursday that she plans to ask the federal government to approve a $150 million transfer. to community development financial institutions.
Those federal dollars, which she said would represent the largest such investment in the state’s history, would come from a larger pool of money that New York had earmarked as part of the U.S. bailout. President Joe Biden. CDFIs are alternative financial institutions focused on lending to people and businesses in low-income communities as a way to build wealth.
The governor made the announcement to SoBro, a CDFI-certified South Bronx nonprofit, following a roundtable with local leaders.
“I believe there has been systemic discrimination and racism inherent in our financial institutions for too long,” Hochul said. “So we have these CDFIs as an alternative to say, ‘No, we can’t just allow the status quo,’ to say these people are going to languish and never have that access. Let’s create another source of funding. Let’s find another way to achieve these goals.
In the Bronx, which is New York’s most underbanked borough, 40% of businesses have closed during the pandemic, according to SoBro president and CEO Lourdes Zapata. A 2020 report from the Center for an Urban Future found that not only did many minority-owned businesses lack the banking connections to receive assistance from the first round of funding from the federal Paycheck Protection Program, but also that money from New York City’s own relief fund went disproportionately to small businesses in Manhattan.
“Our CDFIs are the tip of the spear when it comes to the wealth gap in the United States,” said Adrienne Harris, superintendent of the New York State Department of Financial Services, who joined the governor during the the round table. “We know today that black women have 90% less wealth than white men, which is simply unacceptable. Our CDFIs and [Minority Depository Institutions] are here to help bridge that wealth gap, which will benefit everyone. »
Hazel Dukes, head of the New York chapter of the NAACP that endorsed the governor’s re-election bid, also spoke at the event, noting endorsement of his approach to fairness.
“I do governors, I do presidents of the United States, borough presidents — and we can get rid of them too, if they don’t do the job,” Dukes said. “I’m here today because this young woman, Governor Hochul, is making things happen, including all of us, not just some of us. She wants to raise the tide of the boat for us all to come together. “