COVID-19 Disaster Relief for Small Businesses. The federal government has several programs to provide financial assistance to small businesses affected by coronavirus disease 2019 (COVID-19) public health crisis. Some small businesses in California are ineligible for these programs because their owners may have low credit scores, are undocumented immigrants, or face other barriers to receiving loans from the federal government and traditional lenders. The Small Business Finance Center (SBFC) at the California Infrastructure and Economic Development Bank (IBank) makes loan guarantees to small businesses that cannot otherwise get financing from conventional sources. (A loan guarantee is when the state promises to repay a loan in the event the borrower defaults.) The budget includes $50 million for SBFC to make additional COVID-19 related disaster loan guarantees. This funding supplements an initial $50 million the SBFC received in 2019‑20.
Increase Lending Capacity of Community Development Financial Institutions (CDFIs). CDFIs are lenders that provide loans and other financial services to low-income communities that are underserved by traditional banks and credit unions. The budget package includes $25 million for IBank to increase the amount of capital available to CDFIs. This money will enable these lenders to make additional loans to small businesses affected by the COVID-19 recession in underbanked communities.
Establish Climate Catalyst Fund. IBank provides financing for a variety of private and public projects. The budget package establishes a new Climate Catalyst revolving loan fund at IBank that could allow IBank to help finance climate-related projects in the future. (A revolving loan fund means that the fund is replenished as borrowers repay their loans, and the program may continue making loans indefinitely without continued support.) The budget did not fund the new Climate Catalyst program, so it likely will not make any loans in 2020‑21. However, in the future, should the federal government make funds available to states for climate-related projects, the Climate Catalyst program may be able to receive these funds.