Citigroup Grants $60 Million for Small Business Lending
Posted November 4, 2010on:
A Citigroup Inc.-backed fund has awarded millions to nonprofits aiming to boost small business lending in low-income areas.
The New York-based bank will send $60 million by the year’s end to loan funds managed by Community Development Financial Institutions, or CDFIs, Citi said Wednesday. Community development lenders are nonprofits that seek to expand economic opportunity in areas that are underserved by traditional banks.
The money will go to CDFIs in 39 states and the District of Columbia. It comes from a $200 million fund of which $199 million came from Citi. The remaining $1 million was provided by Calvert Foundation and the Opportunity Finance Network.
Tight credit for small businesses is a major obstacle for the economic recovery. Small business owners say they can’t get loans to hire or expand because lenders worry the economic picture could darken.
Community banks traditionally have provided much of the credit for small businesses. Many bankers now say there aren’t enough creditworthy borrowers to merit an increase in lending.
Lending to small businesses has remained low for much of the year, after falling sharply during the credit crisis of late 2008 and early 2009.
Citigroup’s program aims to fill that need. For example, it is helping a Chicago nonprofit open a 60-seat restaurant that will serve low-cost meals to 3,500 low-income families. The nonprofit expects to add 12 full-time employees to its 49-person fulltime payroll, Citi said.
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