WASHINGTON – U.S. Senators Roger Wicker, R-Miss., and Cindy Hyde-Smith, R-Miss., have joined Senators Mark Warner, D-Va., and Chris Van Hollen, D-Md., in introducing legislation to promote economic development in rural, minority, and low-income communities.

 The Community Development Investment Tax Credit Act (S.4418) would create a new tax credit for private investments in qualified community development financial institutions (CDFIs). Additional private sector investment in these institutions would unlock more equity and long-term financial capital for small businesses and individuals in areas with less access to traditional banks or loans.

 “Small businesses, including those in low-income and minority communities, are a pillar of the economy in Mississippi and across the nation,” Wicker said. “CDFIs support businesses, individuals, and entrepreneurs by providing access to capital and alternatives to predatory loans in low-access areas. I am glad to join my colleagues on this bipartisan measure to create an additional tax credit to support and expand this private-sector investment.”

 “CDFI investments are a critical source of capital for small business growth in many Mississippi communities and around the country. This bill would create a tax credit structure to attract greater private-sector investments in CDFIs, which would increase their ability to spur more long-term growth in disadvantaged areas,” Hyde-Smith said.

 Among other provisions, the bill would help to direct support to lenders that focus on underserved communities by creating a CDFI Tax Credit for private sector investors that make equity, equity-equivalent investments, or long-term patient capital available to CDFIs. The bill would benefit CDFIs of all types, including bank CDFIs, credit union CDFIs, venture capital CDFIs, and CDFI loan funds, while providing institutions with the maximum flexibility and financial support they need to increase wealth in low- and moderate-income communities.

 This legislation has the support of a number of organizations, including Community Development Bankers Association, National Association of Affordable Housing Lenders, Community Development Venture Capital Alliance, LISC, Opportunity Finance Network, CDFI Coalition, Inclusiv, and the Enterprise Community Loan Fund.

Find the text of S.4418 here and one-page summary of the legislation here.