U.S. Sen. Roger Wicker (R-MS) recently unveiled a bipartisan bill that would create a new tax credit aimed at spurring private investment in community lenders in an effort to improve the economic prosperity in America’s low-income, minority, and rural communities.
“The proposed tax credit in this legislation would help address the challenges faced by small business owners and provide an alternative to predatory loans,” said Sen. Wicker, an original cosponsor of the Community Development Investment Tax Credit Act of 2023, S. 2963.
The legislation, which U.S. Sen. Mark Warner (D-VA) sponsored on Sept. 28 alongside four other original cosponsors, including U.S. Sen. Jerry Moran (R-KS), would help unlock more equity and long-term financial capital for community development financial institutions (CDFIs), according to a bill summary provided by the lawmakers.
“Our country was built by small business, but many in low-income areas have trouble accessing the financing they need to launch and grow their businesses,” Sen. Wicker said. “CDFI investments play a pivotal role in bridging these gaps.”
Specifically, S. 2963 would amend the Internal Revenue Code of 1986 to create a credit for investment in CDFIs known as a CDFI Tax Credit. It would be made available for private-sector investors that make equity, equity-equivalent investments, or long-term patient capital available to CDFIs, the summary says.
Several organizations endorsed S. 2963, including the American Bankers Association, the Opportunity Finance Network, Inclusiv, the Community Development Bankers Association, Independent Community Bankers of America, the Local Initiatives Support Corporation, the Community Development Venture Capital Alliance, and the CDFI Coalition.
S. 2963 is under consideration by the U.S. Senate Finance Committee.