In an effort to give small business entrepreneurs in underbanked communities more access to capital, New York Gov. Kathy Hochul announced Thursday that she plans to ask the federal government to approve a $150 million shift to community development financial institutions.
Those federal dollars, which she said would represent the largest investment of its kind in state history, would come out of a larger pool of money New York was earmarked through President Joe Biden’s American Rescue Plan. CDFIs are alternative financial institutions focused on lending to people and businesses in low-income communities as a way of building wealth.
The governor made the announcement at SoBro, a non-profit in the South Bronx that’s certified as a CDFI, following a roundtable meeting with local leaders.
“I believe that there has been systemic discrimination and racism inherent in our financial institutions for far too long,” Hochul said. “So we have these CDFIs as the alternative to say, ‘No, we can’t just allow the status quo,’ to say that these people are going to languish and never have this access. Let’s create another funding source. Let’s find another way to achieve those objectives.”
In the Bronx, which is the most underbanked borough in New York City, 40% of businesses 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 aid from the initial round of federal Paycheck Protection Program funding, 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, the superintendent of the New York State Department of Financial Services, who joined the governor at the roundtable meeting. “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 close that wealth gap, which will benefit everybody.”
Hazel Dukes, head of New York’s chapter of the NAACP who endorsed the governor’s re-election bid, also spoke at the event, emphasizing approval of her approach to equity.
“I make governors, make presidents of the United States, borough presidents — and we can get rid of them too, if they don’t do the job,” said Dukes. “I’m here today because this young woman, Gov. Hochul, is making things happen, including all of us, not just some of us. She wants to raise the boat tide for all of us to come together.”