What is an Emergency Capital Investment Program (ECIP)?
The Emergency Capital Investment Program (ECIP), established by the Consolidated Appropriations Act 2021, is designed to enable low- and moderate-income community financial institutions to lend to small businesses and consumers.
September 1, 2021
Deadline for CDFI and MDI to apply for ECIP funding.
ECIP has authorized the Ministry of Finance to provide up to $ 9 billion to Community Development Financial Institutions (CDFIs) or minority depository institutions (MDIs) for loans, grants and rebates to small and minority businesses in underserved communities affected by COVID, 19 pandemic. Of the total, $ 2 billion was set aside for CDFI and MDI with less than $ 500 million in assets. An additional $ 2 billion was earmarked for CDFI and MDI with less than $ 2 billion in assets.
- ECIP was created to allow low- and moderate-income financial institutions to lend to small businesses in underserved communities.
- The Treasury has been set to provide up to $ 9 billion directly to Community Development Financial Institutions (CDFIs) and minority depository institutions (MDIs).
- An audit of ECIP by the Inspector General’s Finance Office on 8 March 2022 found that the Ministry of Finance had made progress in implementing the program but had missed the statutory deadline by more than a month.
To be eligible for ECIP, in addition to being either a Certified Community Development Financial Institution (CDFI) or a Minority Depository Institution (MDI), the entity must be:
If a financial institution is not insured at the federal level, it does not qualify for participation in ECIP. This includes non-banking CDFIs, Puerto Rican-based cooperatives and privately secured credit unions.
Applicants are required to apply for ECIP through an online portal. The application deadline was September 1, 2021. To be eligible for a capital investment under the program, the applicant must complete the ECIP application form, after which the Ministry of Finance will evaluate the application and determine whether the application is approved. As part of the application process, applicants must submit an emergency investment loan plan that:
- shows 30% or more of loans in the last two fiscal years directly to low- to moderate-income borrowers (LMIs), other target groups, or a combination of both;
- describes how the applicant’s strategy and operational objectives will meet the needs of community development;
- includes a plan to provide access to the community and communication; and
- agrees to comply with the requirements for preferred shares and other financial instruments issued under the Program referred to in Section 104A (b) of the Banking and Community Development Financial Institutions Act 1994.
Any person for whom the beneficial owner, who is a civil servant, directly or indirectly holds a 20% or more share, is not eligible for an investment made under ECIP. According to ECIP, any low- and moderate-income community financial institution can issue financial instruments to the Ministry of Finance only with a total principal amount (or comparable amount) that does not exceed $ 250,000,000.
Financial instruments are also limited to “no more than 7.5% of total assets” for an institution with assets above $ 2,000,000,000. The limit is “not more than 15% of the total assets” for an institution with assets of not less than $ 500,000,000 and not more than $ 2,000,000,000 and not more than 22.5% of the total assets of an institution with assets of less than $ 500,000,000.
Investment limits and termination
Under the Program’s investments, the Ministry of Finance may provide not less than $ 4,000,000,000 to Eligible Institutions with total assets of not more than $ 2,000,000,000 who apply in a timely manner for a capital investment under the Program, of which not less than $ 2,000,000,000 may to be made available to Eligible Institutions with Total Assets of less than $ 500,000,000 that are applied in a timely manner to receive a capital investment under the Program. The program will end six months after the president declares an end to the national emergency in connection with the COVID-19 pandemic, as required by the National Emergency Act.
ECIP to date
Although the Emergency Capital Investment Program (ECIP) is closed for new applications from 1 September 2021, the program continues to disburse funds in accordance with the guidelines provided by the Consolidated Appropriations Act, 2021. Audit of the program from 8 March 2022 from the Office of the Chief Inspector of Finance concluded that the staff acted quickly to establish the program, but did not start accepting applications until March 4, 2021, well after the statutory deadline of January 26. As of December 14, 2021, 186 financial institutions had been approved for capital investments under ECIP totaling $ 8.7 billion.
What types of financial institutions are eligible for ECIP funding?
The Emergency Capital Investment Program (ECIP) is closed for new applications from 1 September 2021. Eligible financial institutions include certified community development
financial institutions (CDFI) and minority depository institutions (MDI). In addition, the eligible institutions had to be federally insured and not controlled by a bank holding company or a savings and loan holding company that also qualifies for the program.
How much can a financial institution receive from the ECIP program?
The Treasury can invest up to $ 250 million in a qualifying financial institution. Additional restrictions are imposed as follows:
- Institutions with total assets> $ 2 billion can receive up to 7.5% of total assets;
- Institutions with common assets <=2 милиарда долара и >= $ 500 million can receive up to 15% of total assets; and
- Institutions with total assets <$ 500 million can receive up to 22.5% of total assets.
Why was ECIP created?
The Emergency Capital Investment Program (ECIP) was created by the Consolidated Appropriations Act, 2021, to allow low- and moderate-income Community financial institutions to lend to small businesses and consumers who are disproportionately affected by the COVID pandemic. -19.
The Emergency Capital Investment Program (ECIP) is a targeted lending program for low- and moderate-income financial institutions that helps these entities provide loans, grants and discounts to small businesses and individuals affected by the COVID-19 pandemic.
As of December 14, 2021, the US Treasury Department has approved 186 financial institutions to pay up to $ 8.7 billion. Although applications are no longer accepted, disbursements continue.