Although the CDFI fund seems to have congressional protection, Hinkle Brown expressed concerns that the regulations may not be effectively enforced.
“The specifics of an overly aggressive implementation are uncertain,” he noted. “If the CDFI fund is essentially rendered useless, it would incur significant costs, with the Philadelphia area facing major repercussions.”
Leslie Benoliel, CEO of Entrepreneur Works in Philadelphia, indicated that this could hinder regional economic development efforts within low-income communities.
“[Community Development Financial Institutions] act as the capillaries of our nation’s financial distribution system. Disrupting the flow to these vital channels could lead to substantial damage,” Benoliel remarked.
She added that small business owners, who often harbor distrust towards traditional banking or government entities, prefer engaging directly with community organizations.
Last year, CDFIs throughout Pennsylvania received $32 million in financial assistance aimed at promoting healthy foods and addressing persistent poverty in various counties.
If federal backing wanes, local nonprofits will likely need to seek alternative funding sources, according to Varsovia Fernandez, CEO of the Pennsylvania CDFI Network.
“We might see a shift towards a fee-for-service model where small businesses would have to pay for technical assistance and education. I would expect that [loan interest rates would increase] for sustainability,” she explained. “I hope any changes from the White House won’t be too drastic.”
On March 17, U.S. Treasury Secretary Scott Bessent emphasized in a statement that the Trump administration recognizes the importance of the federal fund and local lending organizations.
“CDFIs [Community Development Financial Institutions] are crucial to President Trump’s dedication to fostering job growth, wealth creation, and prosperity within Main Street America,” Bessent stated.
