Definition of the Emergency Capital Investment Program (ECIP)

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What is the Emergency Investment Program (ECIP)?

The Emergency Capital Investment Program (ECIP), established by the Consolidated Appropriations Act of 2021, was created so that low- and moderate-income community financial institutions could provide loans to small businesses and consumers.

September 1, 2021

The deadline for CDFIs and MDIs to apply for ECIP funding.

ECIP authorized the Treasury Department to provide up to $9 billion to Community Development Financial Institutions (CDFIs) or Minority Depository Institutions (MDIs) for loans, grants, and forbearances to small-owned businesses. to minorities in underserved communities impacted by the COVID -19 pandemic. Of this total, $2 billion has been set aside for CDFIs and MDIs with less than $500 million in assets. An additional $2 billion has been set aside for CDFIs and MDIs with less than $2 billion in assets.

Key points to remember

  • ECIP was created to enable low-to-moderate income financial institutions to lend to small businesses in underserved communities.
  • The Treasury has been designated to provide up to $9 billion directly to Community Development Financial Institutions (CDFIs) and Minority Depository Institutions (MDIs).
  • A March 8, 2022 audit of the ECIP by the Treasury Office of the Inspector General found that the Treasury had made progress in implementing the program but had exceeded the statutory deadline by more than a month.

ECIP Eligibility

To be eligible for ECIP, in addition to being a Certified Community Development Financial Institution (CDFI) or Minority Depositary Institution (MDI), an entity must be:

If a financial institution is not federally insured, it is not eligible to participate in ECIP. This includes CDFIs that are not banking institutions, Puerto Rico-based cooperatives, and privately insured credit unions.

ECIP application

Applicants are required to apply for the ECIP through an online portal. The application deadline was September 1, 2021. To be eligible to receive an equity investment under the program, an applicant must complete the ECIP application form, after which the Treasury will assess 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 lending in the past two fiscal years directly to low-to-moderate income (LMI) borrowers, other targeted populations, or a combination of the two;
  • describes how the applicant’s strategy and operational objectives will meet community development needs;
  • includes a plan to ensure community outreach and communication; and
  • agrees to comply with the requirements for preferred stock and other financial instruments issued under the program set out in Section 104A(b) of the Community Development Banking and Financial Institutions Act 1994.

Exclusions

Any entity in which a beneficial owner who is a government official directly or indirectly holds an equity interest of 20% or more is not eligible for any investment made under the ECIP. Under the ECIP, each low- and moderate-income community financial institution can only issue financial instruments to the Treasury with an aggregate principal amount (or comparable amount) not exceeding $250,000,000.

Financial instruments are also limited to “no more than 7.5% of total assets” for an institution with assets exceeding $2,000,000,000. The limit is “no more than 15% of total assets” for an institution with assets of no less than $500,000,000 and no more than $2,000,000,000 and no more than 22.5% of total assets for an institution with assets of less than $500,000,000.

Investment limits and termination

Across all program investments, Treasury can make available at least $4,000,000,000 for eligible institutions with total assets not exceeding $2,000,000,000 that timely apply to receive capital investment under the program, of which not less than $2,000,000,000 may be made available to eligible institutions with total assets of less than $500,000,000 that timely apply to receive capital investment under the program. Program. The program will end six months after the President declares the end of the national emergency regarding the COVID-19 pandemic, as required by the National Emergencies Act.

ECIP to date

Although the Emergency Capital Investment Program (ECIP) is closed to new applications as of September 1, 2021, the program continues to disburse funds in accordance with guidelines provided by the Consolidated Appropriations Act 2021. A March 8, 2022 audit of the program by the Treasury Office of the Inspector General found that officials moved quickly to establish the program, but did not begin accepting applications until March 4, 2021, well after the date January 26 statutory deadline. As of December 14, 2021, 186 financial institutions have been approved for ECIP capital investments totaling $8.7 billion.

What types of financial institutions are eligible for ECIP funding?

The Emergency Capital Investment Program (ECIP) is closed to new applications beginning September 1, 2021. Eligible financial institutions included Certified Community Development

financial institutions (CDFI) and minority depository institutions (MDI). Additionally, eligible institutions had to be federally insured and not controlled by a bank holding company or savings and loan holding company also eligible for the program.

How much can a financial institution receive from the ECIP program?

The Treasury can invest up to $250 million per eligible financial institution. Additional limits are imposed as follows:

  • Institutions with total assets over $2 billion can receive up to 7.5% of total assets;
  • Institutions whose total assets are = $500 million can receive up to 15% of total assets; and
  • Institutions with total assets of less than $500 million may 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 of 2021 to enable low and moderate income community financial institutions to provide loans to small businesses and affected consumers in a way disproportionate to the COVID-19 pandemic.

The essential

The Emergency Capital Investment Program (ECIP) is a lending program specifically targeted for low- and moderate-income financial institutions that helps these entities provide loans, grants and forbearances to small businesses and affected individuals. by the COVID-19 pandemic.

As of December 14, 2021, the US Treasury Department has authorized 186 financial institutions to disburse up to $8.7 billion. Although applications are no longer being accepted, the disbursement of funds continues.

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