The Community Development Financial Institutions Bond Guarantee Program (CDFI BGP) was established by the Small Business Jobs Act of 2010 in September of that year. The legislation directs the U.S. Department of the Treasury to guarantee the full amount of bonds issued to support CDFIs that make investments for eligible community or economic development purposes. The bonds support CDFI lending and investment by providing a source of long-term, patient capital to CDFIs. The Treasury Department may guarantee up to 10 bonds per year, each at a minimum of $100 million. Per statute, the total issuance of all bonds cannot exceed $1 billion per year. After delays related to a legislative fix, in FY2013 the Treasury Department received authority to guarantee up to $500 million in bonds. Eligible uses for loans made under this program include a variety of community development activities, among them support for community facilities, including charter schools.
On an annual basis, 90% or more of the principal amount of guaranteed bonds must be used to make loans for eligible community or economic development purposes. The unpaid principal balances of the bonds must be held in 1) community or economic development loans, 2) a relending account, or 3) a risk-share pool. Bonds are subject to annual compliance tests. Bond issuers pay an annual fee to the Treasury Department of ten basis points of the bond’s unpaid principal to offset the program’s administrative costs.
In accordance with federal credit policy, the Federal Financing Bank, a U.S. government corporation under the general supervision and direction of the Treasury Department, finances obligations that are 100% guaranteed by the United States, such as the bonds or notes issued by CDFIs under the CDFI BGP. Awardees have two years to deploy the capital under the program.
Annual competitions have been released in FY2013 through FY2016; annual awards are listed in this downloadable table. To date a total of $158.9 million has been deployed for 30 charter schools. A new competition was released in FY2017 for a total allocation amount of $750 million.
Last Updated: August 2017