i want to understand the cdfi lending guidelines and not in ex excruciating detail.top level. >> to dive deep into the weeds would be the task of the working group. you know, the essential way you guard against that kind of rink is you have rigorous under writing standards that are vetted and are publicly -- they're available to the public for review. and the way we design the bank, i mean, you have to anticipate that some loans you make will not be repaid. our model could withstand very, very heavy losses. and still remain solvent. the trade off is it grows slower and it has a lower rate of return but the benefit is the financial commitment has a robust and very strong buffer and i think we did modeling and our bank could withstand a great depression-like scenario. our model would have done very well in it just has so much cushion. >> what is the typical loan size to a cdfi. >> i don't know the context of that question this is a wholesale lending environment and it's a cdfi. so we talked about over the first few years there being roughly $80 million in funds contrib

i think the intentional nature of looking how to push the money down to cdfis was a good one because we have to be intentional about it. there has to be organizations or resources that are if nothing else describe said as boots on the ground kind of approaches. and understanding where those businesses are and being able to market and communicate the existence of the resources. because that has been one of the biggest barriers of entry for achieving this money throughout the cycle is where the resources, where can we identify those resources, and then the government being or private sectors that have taken this on, being intentional in making the information known. >> and just follow-up on that last point. what would be an effective way -- and i know i'm kind of putting you on the spot a little bit, but what would be an effective information known and communicate what is available to these communities? >> i think you have to meet people where they are, right? and so if you're looking to increase awareness in particular communities what are those, how do you use means to advertise that

what are those-- the knowledge of where the cdfi's are. how do you use means to advertise that information, and whether it's through our churches or through organizations that exist in those communities, i think that is how you meet people where they are. >> thank you. i appreciate that very much. professor fairlie, you had touched on this on your written testimony, the first rounds of funds and the second rounds. the same question for you, if i may. what are some of the barriers that you've determined and seen from your research on getting the cdfi's connected to those underserved communities? >> well, i think that, you know, the big problem in the first round, it was mainly an established thing that were providing the funds and those were going out to mostly nonminority businesses and then it was the second round of the ppp funds that were really targeted, trying to get it to local banks, cdfi's, and organizations that made a difference and the research that i showed you you can see the incredible difference between the positive relation

there's a big difference and i'm happy for the cdfi because i have a passion for doing that and working with people and not just numbers or telephones. this is a big difference and we need grand capitol to help provide more. the funding that's not available so definitely there during services like this. during the assessment capitol, we need it to power overhead to provide more thank you for asking. >> thank you. ranking member about seeing whether we can provide some of that capitol for the non- think cdfi. >> that would be great. thank you. >> i believe it's senator sinema joining us by phone from arizona. >> thank you to ranking member to me for holding this hearing and to our witnesses for joining us today. arizona small businesses in our economy, before this pandemic hits, small businesses in arizona employed 1.6 million workers, more than half of the state workforce and created $71.3 billion in annual wages and for those employees but today is a different story. small businesses struggling to keep their doors open. among those hardest hit are arizona's local and independent restau

more so than the larger business that is had resources to get through this mdfi, mdis and cdfis are veryappropriate for me to take a position on this particular provision and its inclusion in the legislation i would just say that it is important for small businesses and you mentioned the mdis and cdfis. we work very closely with those organizations and think highly of the contribution to our economy. >> yes, sir. i concur about working closely with them. i happen to be aware of some of the good works the community banks, as you know, i'm very much concerned about them and some of them are on the margins and this type of assistance to some of these smaller banks can be a great help to them i don't want to you comment on a specific bank or specific banks in general but i am concerned about the need to maintain these institutions that have a niche they have a clientele that somehow and sometimes will not be met their needs won't be met if they don't have these institutions that are in the communities. have you found it's good to have these institutions and these communities where the need i

i would say mdi's and cdfi's are very important channels for reaching them. it is not appropriate for me to take a position on this particular provision, and its inclusion in legislation, but i would just say that it is important for small businesses. as you know, we work very closely with those organizations and think highly of the contribution they make to our economy. rep. green: and i concur with what you said about working closely with them. i happen to be aware of some of your good work. the community banks, as you know , i am very much concerned about them. some of them on the margins, this type of assistance for some of these smaller banks can be a great help to them. i don't want you to comment on a specific bank or specific banks in general, but i am concerned about the need to maintain these institutions that have a niche. they have a clientele that somehow and sometimes will not be met. there needs won't be met because they don't have these institutions in the community. have you found that it is good to have these institutions in these communitie

act, numerous cdfis, minority depository institutions and fintechs were approved to provide ppp loans. so, that is a good thing. as a short term option, allows ing fintech companies to administer ppp loans during a crisis and offering business owners more seamless options was critical to keeping many businesses afloat. however, fintech companies do not have preferred lender status, meaning businesses will still be required to access other options if sba loans are out of reach in the future. so would you kindly, ms. guzman, speak to whether you see fintechs as a new emerging tool for the small business administration and its loan programs. ms. guzman: thank you for that. adoption of fintech across the banking sector, as well as the new fintech companies, is really critical. i think expanding distribution for capital will improve access and so i look forward to, you know, partnering with the -- with the lending institutions broadly to ensure that we can keep them engaged in sba programs. this has been a record high number of different lenders engaged in sba than ever before, and i think

opportunitye op there is the federal government to partner with community-based lenders including cdfis, community development financial institutions, to perhaps deploy short-term aid or low interest to financing to help struggling landlords with assets to remain solvent through this pandemic. of course nothing will help more than just making sure we're ablk to get direct assistance and hor funding into theen hands of tho renters. and we do know that our latino renters in particular use pa their -- any payments that we'r getting to pay for basic needs g likeue rent. so, appreciate your question and the comments of my colleagues. h >> thankav you. and madam chair, i just want to thank you.i want i know you've been focused on this issue like a laser. you know, i do want to say abouk some of my republican colleagues, you know, i love yot but i can tell by the way you talk about this you have never stood in an unemployment line, you know?you and i have been an iron worker for 20 years. and you're constantly working yourself out of a job. i think you might have a different perspective if you

act, numerous cdfis, minority depository institutions and fintechs were approved to provide ppp loans. so, that is a good thing. as a short term option, allows ing fintech companies to administer ppp loans during a crisis and offering business owners more seamless options was critical to keeping many businesses afloat. however, fintech companies do not have preferred lender status, meaning businesses will still be required to access other options if sba loans are out of reach in the future. so would you kindly, ms. guzman, speak to whether you see fintechs as a new emerging tool for the small business administration and its loan programs. ms. guzman: thank you for that. adoption of fintech across the banking sector, as well as the new fintech companies, is really critical. i think expanding distribution for capital will improve access and so i look forward to, you know, partnering with the -- with the lending institutions broadly to ensure that we can keep them engaged in sba programs. this has been a record high number of different lenders engaged in sba than ever before, and i think

and especially the role that cdfi can play in expanding access to capital, the impact that can have an inequality in getting our economy really moving again. dr. rouse: thank you, senator, you raise a very important issue . as we think about having a shared recovery and ensuring that not just the average does well but everybody, i want to emphasize that geographic diversity and what happens in our rural areas in particular and there hardest hit areas is an important part of that. we know that stimulating economic activity is the best way to generate employment for all areas and therefore economic security to ensure that the young people want to stay in those areas. they have an incentive to stay and not flee to urban areas in order to find a job. if we want to bring back vibrancy to all of the areas of the u.s., we have to ensure that the businesses in the smaller businesses have access to capital so they can get started and during a downturn such as this, that they access the capital so they can thrive during economic activity and a bridge to make sure they survived to the other side.

then we need to make sure that we have what we call a comeback bank and that is to put money into the cdfins, equity and mentorship that's no small part the other part to this when i get to go big, it is infrastructure we need to invest in infrastructure they have a plan to invest in infrastructure my plan is to make certain we fix basic infrastructure fractured bridges, sewer mains make sure the basic infrastructure is working with the environmental crisis we're facing >> sorry >> i was going to say, ray, all of this sounds great, but costs a lot of money the question is do you raise taxes? who do you raise taxes on at a time when we keep hearing stories about some of the wealthiest new yorkers fleeing this is an issue not just in new york city but it's an issue in many cities and states across the country, especially that have been hit with the s.a.l.t. tax, the taxes have effectively gone up on everybody what do you do to tell them to stay and pay more if that's the case >> well, andrew, what we know about new yorkers is that new yorkers like me, i love new york the people love new york

there's $10 billion that was put aside to build up the capacity of cdfi's and minority-owned institutions. i want to thank my colleague, senator mark warner of virginia, for his efforts in putting that together. and that provided greater capacity for mission lenders who were more likely to help in the underserved communities to be there with the capital necessary to participate in the s.b.a. programs. we also decided that we had to do more than just that. we got set-asides for mission lenders in the act and we had set-asides for smaller of the small businesses. the smaller the small businesses are the ones that had the greatest need. lessons learned from what we did. and that was that the eidl program was not set up as congress intended. when you look at the demographics as to what type of company uses the eidl program as compared to the p.p.p., the smaller small businesses, the more vulnerable part of small businesses, were likely to use the eidl program. so we anticipated, as i said, the eidl advance, which was so important to small businesses who really don't believe they can take out