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Earlier today Treasury officials announced a new initiative that will use up to $1 billion from the Troubled Asset Relief Program to provide lower-cost capital to banks, credit unions, and thrifts that have been certified as Community Development Financial Institutions. The intention, officials say, is to boost the small business lending ability of CDFIs serving low- and moderate-income communities around the country that are struggling because of the recession.
Officials say term sheets will be available by the end of the week and certified institutions will be able to apply by the end of the month.
The CDFI program is separate from the legislative proposal Obama made yesterday to create a $30 billion fund to help community banks provide loans that will spur hiring by small businesses.
For a look at how CDFIs have been expanding their role as small business lenders, check out John Tozzi’s recent story.