Republican lawmakers are expressing apprehension over a plan by the Trump administration to gut federal spending on a program some have called a “lifeline” for small businesses in districts and states they represent.
President Donald Trump issued an executive order late Friday directing agencies to eliminate “to the maximum extent” the Community Development Financial Institutions Fund — a longtime, bipartisan program that provides millions of dollars annually to lenders operating in poorer rural and urban areas underserved by big banks.
“The CDFI Fund is a lifeline for underserved populations to access capital & directly supports multiple Orange County credit unions that serve our community,” Rep. Young Kim (R-Calif.), a House Financial Services member, said on X. “This partnership represents the best of public-private sector collaboration & deserves our continued bipartisan support.”
Trump’s proposal to cut the fund crosses into an area lawmakers are loath to touch — assistance for the main street business community many GOP members turned to for support during the election. The administration’s latest action, which could more heavily impact red districts, may show the limits of Republican support for the administration’s cost-cutting crusade.
House Financial Services Chair French Hill (R-Ark.) and Senate Banking Chair Tim Scott (R-S.C.) have also historically been strong proponents of the targeted fund. From the inception of the CDFI Fund in 1994 through February 2025, Arkansas-headquartered CDFIs have received $187.9 million from the fund and South Carolina- headquartered CDFIS have received $75.3 million, according to the CDFI Coalition, an industry advocacy group.
“Chairman Hill knows the impact CDFIs can have on communities, particularly in rural areas,” said Brooke Nethercott, a spokesperson for Hill, a former community banker. “Our Committee looks forward to learning more from the administration.”
Arkansas Capital Corp., a private, nonprofit special project finance company in Hill’s district, often works with rural areas and has received $7.4 million in CDFI funds since 2017. Sam Walls, CEO of the corporation, said the executive order “came out of left field.” There’s a “lot of uncertainty” in the industry at the moment and “clarity would be helpful sooner rather than later,” Walls said.
A spokesperson for Scott said the lawmaker “has long supported efforts to increase access to capital in underserved communities and will continue to work with his colleagues and the Trump administration to unleash both private and public investment in areas across the country that need it most, whether that’s through the CDFI Fund or other programs.”
Scott, during the height of the Covid pandemic, defended at a hearing the “significant role” of CDFIs in providing financial services to Black- and Hispanic-owned businesses that were disproportionately hit by the crisis.
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https://www.politico.com/news/2025/03/19/trump-cut-cdfi-bipartisan-lending-00237599
