Black-owned businesses are getting a major boost from the Fed.
A the Freedman's Bank Forum on Tuesday (December 14), Vice President Kamala Harris and Treasury Secretary Janet Yellen unveiled the US Treasury's plan to distribute $8.78 billion –– with a capital "B" –– to help increase lending to Black-owned business and access to banking in low-income communities.
The funds are coming from the Emergency Capital Investment Program –– an initiative formed this year –– and will be distributed to 186 community-based financial institutions.
"The wealth gap persists today, the homeownership gap persists," Harris said, emphasizing the need for these major investments. "Black entrepreneurs are three times more likely to report that a lack of access to capital negatively affects their profit margins," she added.
Black businesses have been disproportionately impacted by the economic fallout of the Covid-19 pandemic, evidenced by higher rates of business closures, and more.
Secretary Yellen said the funding will help "prevent small business owners of color from closing two of their locations. And better yet, it will help people open two more."
The nearly $9 billion will be distributed to financial institutions in 36 states, Washington, D.C. and Guam. An estimated 54% of funds will be going to banks and 46% is set to go to credit unions.
The largest firms will see more than $200 million each while the smaller ones will receive less than $100,000.