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Treasury Department says blackout period is necessary to overhaul CDFI Certification application and reporting requirements.
The Community Development Financial Institutions (CDFI) Fund will not accept new applications for CDFI Certification and Target Market modification requests between October 1, 2022 and April 3, 2023, Treasury Department officials announced Wednesday.
Officials said they will review all pending CDFI applications and Target Market modification requests submitted before October 1, 2022 by April 3, 2023.
The announcement came on the same day the House passed legislation that would provide $336.4 million for the CDFI program in FY23, which begins on October 1. That represents a $41.2 million boost over the current funding level. The Biden Administration requested $331 million for the program next year.
The Senate has not begun its appropriations process and it is unclear how the application delay will affect funding for the program.
Reasons for the Move
The delay is necessary, department officials said, as the Treasury takes the next step in overhauling the certification application and reporting requirements. In May, 2020, CDFI officials requested public comment on both the certification application and reporting requirements.
All credit unions that wish to apply for CDFI Certification or to modify their Target Markets after October 1, must apply after April 3, 2023, using the new application.
“The CDFI Fund undertook an extensive review and comment period on its CDFI Certification requirements in order to ensure that its policies and procedures continue to meet statutory and regulatory requirements while being responsive to the evolving nature of the CDFI industry,” Treasury Department officials stated, in announcing the changes.
As part of that process, the department revised the certification application, the annual certification and data collection report, and introduced transactional level data from all CDFIs.
In the near future, the Office of Management and Budget will release updated documents for comments. The department said that will be the last chance for feedback to be submitted on the plans.
What About Already Certified CDFIs?
The updated applications will be used for all new CDFI applicants beginning on April 3. Existing CDFIs will have a one-year grace period to comply with the new certification criteria.
Treasury officials said that during the blackout period, CDFIs will be required to be in good standing with respect to their certification process.
To help answer questions about the blackout period and new application, fund officials have updated the Frequently Asked Questions (FAQs) section on the Fund’s CDFI Certification Application & Data Collection Reporting Revisions webpage.
Complaints from Credit Union Trade Groups
The announcement comes as credit union trade groups register complaints about the CDFI application process, which they have done since the start of the year.
On Tuesday, Brad Thaler, vice president of legislative affairs at the National Association of Federally-Insured Credit Unions (NAFCU) wrote in a letter to congressional leaders that member credit unions have reported processing times for their CDFI applications of more than 12 months. Several members also said they have lost their CDFI certification without the opportunity to make changes that would bring them into compliance.
Thaler added that NAFCU officials have learned the new certification process likely will make it more difficult for small and Minority Depository Institutions to become certified.
“This would seem to be contrary to the steps Congress is taking to try to expand the use of CDFIs to help communities in need,” he stated.
CDFI Fund
