Access to Fair Financing for Opportunity and Resilient Development Act

Overview

S. 3940, titled the Access to Fair Financing for Opportunity and Resilient Development Act, was introduced in the 119th Congress. The bill aims to expand and strengthen the Community Development Financial Institutions (CDFI) program and related authorities under the Community Development Banking and Financial Institutions Act of 1994. It includes provisions to enhance congressional oversight, expand bond guarantees, improve capitalization and liquidity tools, create a Native CDFI relending program, and increase transparency through regular reporting.

Purpose and intent

• Increase access to patient, long-term capital for community development and underserved communities.
• Strengthen the CDFI Fund’s tools to promote economic opportunity, housing, and resilience in distressed areas.
• Improve accessibility of capital to Native communities through targeted programs and a dedicated relending mechanism.
• Enhance accountability and oversight by mandating annual testimony from the Secretary of the Treasury before Congress.

Key provisions

1) Annual testimony requirement
- Adds a new subsection requiring the Secretary of the Treasury (or designee) to annually testify before the Senate Banking Committee and the House Financial Services Committee regarding the operations of the CDFI Fund for the previous fiscal year, at the discretion of committee leadership.

2) CDFI Bond Guarantee Program improvements
- Reaffirms the program’s role in providing long-term capital to CDFIs.
- Modifies guarantee parameters:
- Adjusts the calculation related to outstanding principal in the guarantee framework.
- Sets a minimum guarantee amount of $25 million, with an annual cap of $1 billion in total guarantees.
- Replaces a date reference with a new sunset/trigger: the later of four years after enactment or December 31, 2030.
- Defines a clerical amendment to add 114A to the table of contents.

3) Funding and capitalization reforms (Section 4 reforms)
- Recasts Section 113 to broaden permissible uses of Fund capital:
- Purchase of loans originated by CDFIs, loan participations, or interests.
- Credit enhancements, guarantees, and loan loss reserves to improve liquidity for CDFIs.
- Recognition that Fund disbursements count as Federal government funds.
- Refinement of eligibility and prioritization for Fund-assisted activity:
- Eligibility broadened to entities with a primary community development purpose, not strictly limited to CDFIs.
- Prioritization aims to favor organizations with demonstrated capacity, potential to increase loan originations or volumes, and geographic reach to underserved borrowers.
- Increased funding and scope:
- Minimum guaranteed loan or investment size raised (e.g., subsection (c) now references larger financing thresholds and a three-year period removal for certain metrics).
- Introduction of a regulatory framework to implement these authorities.

4) Native CDFI Relending Program (new subpart under Section 502 of the Housing Act of 1949)
- Establishes an affirmative, dedicated relending program for Native CDFIs:
- Defines terms including Alaska Native, Native Hawaiian, and priority Tribal land.
- Purpose: expand homeownership opportunities and provide capital to Native CDFIs to increase mortgage activity.
- Sets aside: up to $50 million per fiscal year for direct loans to Native CDFIs.
- Lending requirements: funds used to make loans to eligible Native borrowers, prioritizing those on priority Tribal land.
- Non-Federal cost share: Native CDFIs must provide at least 20% match; waivers available for certain loans benefiting priority groups.
- Reporting: annual reports by Native CDFIs on lending activity; a Treasury-to-Congress annual report detailing loans, borrower demographics, and average loan amounts; program evaluation within 3 years assessing effectiveness and potential expansion.
- Grants for operational support: grants to Native CDFIs equal to 20% of the direct loan amount to support operations and outreach.
- Authorization for outreach and technical assistance funding: $1 million per year for 2025–2027 to support outreach and TA, with a national organization potentially receiving funding for these activities.
- Administrative costs: allow up to 3% of subsection funds for administration.

5) Emergency Capital Investment Funds (Section 104A amendments)
- Amends the handling of funds received from purchases under Section 113 so that proceeds are deposited into the Fund and used for:
- Financial and technical assistance under Section 108.
- Credit enhancements and related activities, with certain waivers of existing requirements to enable rapid deployment.

6) Annual and periodic reporting
- Explicit annual reporting requirements to Congress on Fund use, loan purchases, guarantees, and liquidity impacts.
- Includes evaluation of program effectiveness and recommendations about potential expansion or adjustment of set-aside levels.

Who would be affected

• Community Development Financial Institutions (CDFIs) and prospective beneficiaries in distressed communities.
• Native communities served by Native CDFIs, including Alaska Native, Native Hawaiian, and Tribal lands.
• The Secretary of the Treasury (and Treasury designees) due to expanded testimony and reporting duties.
• Congress, via annual and periodic oversight and evaluation reports.
• Borrowers seeking mortgage and small-business-like financing supported by CDFI guarantees, loan purchases, and liquidity-enhancing activities.

Procedural and timeline aspects

• Introduced February 26, 2026; referred to the Senate Committee on Banking, Housing, and Urban Affairs.
• Key timeline triggers include:
  • A sunset/benchmark date for the CDFI Bond Guarantee program: later of four years after enactment or December 31, 2030.
  • A three-year window for a comprehensive evaluation of the Native relending program and the broader Fund authorities.
  • Annual testimony and annual reporting requirements beginning after enactment and continuing each fiscal year.
  • Authorized funding for Native outreach and TA through 2027 (with ongoing funding contingent on appropriations).

Summary

S. 3940 seeks to strengthen and broaden the CDFI ecosystem by codifying annual Treasury testimony, expanding and clarifying bond guarantees, increasing capitalization and liquidity tools for CDFIs, creating a dedicated Native CDFI relending program with targeted support and reporting, and sharpening accountability through regular oversight and evaluations. The bill emphasizes supporting underserved communities, expanding Native homeownership, and enhancing the resilience and reach of community development finance across the United States.