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12.3 Grants to Establish Loan-Loss Reserve Funds

<< Title XII Overview

12.3 Grants to Establish Loan-Loss Reserve Funds

 

 


12.3.     Grants to Establish Loan-Loss Reserve Funds.  The Act authorizes the Community Development Financial Institutions Fund ("Fund") to provide assistance to institutions that qualify as community development financial institutions ("CDFI") to establish and maintain small dollar loan programs.  These programs would involve loans of $2,500 or less that must be repaid in installments and that do not have any pre-payment penalty.  The Fund is to make grants to CDFIs or to any partnership between a CDFI and a qualifying insured depository institution to establish loan-loss reserve funds to defray the costs of operating small dollar loan programs.  Any participating CDFI or partnership of institutions must provide matching funds of at least 50% of the amount received from the Fund.  Any funds received from the Fund may not be used to make direct loans to consumers. [§1206]