American Rescue Plan: Partners for Rural Transformation Offers Four Recommendations to Reach Persistent Poverty Counties
Berea, KY: The Partners for Rural Transformation (PRT) published a policy brief with four primary recommendations to ensure funding from the State Small Business Credit Initiative reaches businesses in persistent poverty counties.
The American Rescue Plan reauthorizes and expands the State Small Business Credit Initiative (SSBCI), originally launched in 2010. The $10 billion from the SSBCI is an opportunity to reach small businesses in persistent poverty communities, particularly rural and communities of color, through community development financial institutions (CDFIs).
PRT’s four primary recommendations are:
- Ensure states’ accountability to serve persistent poverty counties,
- Ensure meaningful engagement of community development financial institutions (CDFIs)/minority depository institutions (MDIs) with track records of reaching underserved communities, disadvantaged businesses, and very small businesses,
- Ensure products meet the needs of underserved communities, and
- Ensure transparency and accountability for states’ performance.
CDFIs with solid track records in working in persistent poverty communities in rural areas and communities of color are vital to ensuring capital gets to businesses in these areas.
The Partners for Rural Transformation from 2016 to 2020 generated $366.9 million in small business lending, with $122.3 million going to persistent poverty counties. Nearly 30% of the small businesses were in rural communities, 65% of the loans were directed to businesses owned/led by people of color, and 41% of the businesses were owned/led by women.
The U.S. Treasury and states should ensure SSBCI targets small businesses in persistent poverty communities and engage CDFIs with solid track records and existing presence in these communities in implementing and deploying the funds.
According to Partners for Rural Transformation, of the 395 U.S. counties with persistent poverty, 8 out of 10 are rural, and 60% of the residents are people of color. In addition, the ongoing health and economic crises resulting from the COVID-19 pandemic have further added to the barriers faced by these distressed communities.
Click here to view the Policy Brief