PPP Funded – For Now
In March, Congress passed the CARES Act, which created the Paycheck Protection Program (PPP) to provide forgivable loans to small businesses and nonprofits affected by the COVID-19 outbreak. Funding for the PPP and other critical programs supported by the CARES Act was exhausted very quickly, forcing Congress to provide additional funding. In late April, Congress responded with a $484 billion bill to replenish funding for the PPP and other programs, such as the Economic Injury Disaster Loan (EIDL) program.
However, demand for these PPP loans remains high, and it is expected that this funding will be exhausted quickly.
If you have questions about the PPP, please check out Cinnaire’s COVID-19 resources page.
What’s Ahead?
Congress has now passed four pieces of legislation in response to the escalating nature of the crisis. By Washington standards, these relief bills have come together very quickly and with minimal partisanship. But where will Congress go from here? Will they be able to function in this era of social distance?
Work is already underway on the next package of relief. It’s unclear exactly what this legislation will look like, but one thing is certain: The road ahead is looking bumpier than the first several rounds. Democrats, who control the House of Representatives, believe that more action is needed now. They will be pushing ahead with a new relief package, possibly as soon as this week. However, they will need to convince Republicans on Capitol Hill, who have already expressed skepticism that more aid is warranted — at least for now.
There will be continued pressure for another response, especially as states face massive budget shortfalls stemming from the crisis and PPP funding is once again exhausted. There is a wide range of issues that are likely to be part of the debate:
- Funding for state and local governments
- PPP funding and potential reforms to better target the program and provide more flexibility to businesses
- Additional direct cash assistance to individuals
- Liability protections for employers
- Boosting tax incentives for employers to retain employees
- Renter protections and rental assistance
- Support for the Postal Service
- Funding for election assistance
Looking even further ahead, there may be an appetitive for doing broader legislation focused on rebuilding the economy and getting people back to work. This package will likely focus on infrastructure.
Advocating for Housing and Community Development
For those of us working with underserved communities, it is clear that more action will be needed to ensure that people have access to quality, safe housing and the essential components of healthy communities. As the impacts of the COVID-19 crisis become more apparent, however, so too does the list of requests from various sectors looking for aid from Congress.
How do affordable housing and community development priorities fit into the larger puzzle? What can we do to raise the profile of the issues affecting communities we serve, which are likely to be the hardest hit by the crisis?
While the road ahead will be uphill, the good news is that we have started to see more interest on Capitol Hill for affordable housing and community development. Cinnaire is working with our coalitions to build support for these policies in Washington by sharing the impact of potential policy responses.
Read below for a snapshot of potential solutions to emerging issues and learn how you can help us build the case for action.
Rental Assistance
The COVID-19 crisis has hit low-income communities the hardest at a time when safe, affordable housing is more critical than ever. According to an analysis by the McKinsey Global Institute, up to 86% of the vulnerable jobs in this crisis paid less than $40,000 per year, putting pressure on families who were already living paycheck to paycheck. Despite some relief from unemployment compensation, eviction moratoria and forbearance, low-income families and individuals will be particularly vulnerable without additional relief.
House Democrats plan to release legislation that will include $100 billion in emergency rental assistance targeted at Extremely Low-Income and Very Low-Income households who could be facing mounting debt. The proposal would utilize the Emergency Solutions Grant (ESG) program to provide short-term and medium-term rental assistance. In the Senate, Democrats have introduced a bill to create a Housing Assistance Fund to provide $75 billion to state Housing Finance Agencies (HFAs) to help avoid defaults, foreclosure, and evictions.
It is too soon to know whether rental assistance or support for the housing sector will be included in the next package. There are many competing priorities and there is some skepticism, especially among Republicans, that rental assistance is needed given enhancements to unemployment benefits.
Housing Credit
In addition to the stress on residents, the COVID-19 crisis has caused challenges for both existing and future developments supported by the Low-Income Housing Tax Credit (LIHTC). In response to these challenges, the ACTION Campaign – a broad coalition of supporters for the Housing Credit – sent a letter to Congress requesting a range of statutory changes to the program, including a 4% credit minimum, lowering the bond financing threshold, increasing Housing credit allocations, and other items. Recently, a bipartisan group of key House Committee members sent a letter to Congressional leadership urging that several of these items be included in the next package, including a 4% credit minimum.
There is considerable interest in enacting the 4% minimum rate, which has fallen precipitously since the start of the crisis as a result of the Federal Reserve’s actions on interest rates. Cinnaire has shared impact stories with our coalitions and federal representatives.
Deadline Extensions: Our coalitions have also been working to encourage federal agencies to take action on deadline flexibility as a result of construction and leasing delays. The Internal Revenue Services (IRS) has extended through July 15, 2020, a list of tax deadlines falling on or after April 1, 2020 and before July 15, 2020. These include important LIHTC deadlines. Several states, including Michigan and Indiana, have elected to use authority under federal disaster designations to extend key deadlines.
Requesting Additional Investment from Fannie Mae and Freddie Mac: Cinnaire has joined with a group of industry participants to encourage the Federal Housing Finance Agency (FHFA) to allow Fannie Mae and Freddie Mac to increase their investments in Housing Credits. Currently, FHFA has capped the amount that Fannie Mae and Freddie Mac can invest in Housing Credits. We believe that increasing these caps will help ensure the flow of capital to affordable housing production when it is needed most.
What you Can Do: If you have stories about the impact of the 4% rate reduction, deadline issues, or other Housing Credit challenges, please contact Chris Neary.
Community Development Financial Institution (CDFI) Support
CDFIs are at the front lines of responding to the economic fallout of the COVID-19 crisis, providing patience and flexibility for communities that need it most. As the needs of the communities we serve increase, CDFIs need access to more low- or no-cost capital. Cinnaire is supporting an effort to provide an emergency appropriation of $1 billion for the CDFI Fund. 
More than 500 CDFIs, community banks, nonprofits, tribes, and other mission-driven oriented organizations requested this funding. A bipartisan group of Senators are circulating a letter in support of this request.
What you Can Do: We encourage our partners to contact their elected officials to urge them to support $1 billion in the next response package.
If there are issues that you believe should be addressed to help weather this storm, please contact Chris Neary.
Community Reinvestment Act (CRA) Regulations
Federal Regulators Undeterred by Crisis
Despite the ongoing crisis, some federal banking regulators intend to move forward with their proposed changes to the Community Reinvestment Act (CRA). As we have detailed previously, this rewrite of current CRA rules would have major negative ramifications for the availability of capital for affordable housing and community development projects in underserved communities. Cinnaire weighed in with regulators to outline our concerns. Read our comment letter for our perspective.
Some groups – including key banking trade groups – have urged federal regulators to hit the pause button on the rule as banks work to respond to the COVID-19 crisis. So far, the regulators have sounded undeterred. We will keep a close eye on the regulators and this rule making.
