US credit unions warn CDFI funding cuts could hit small business lending
As part of its FY2027 federal budget proposals, the Trump administration has put forward US$ 204.5 million in cuts to discretionary awards for the CDFI Fund, a US Treasury programme that supports financial institutions and community lenders in areas neglected by traditional bank
WASHINGTON DC., April 26, 2026 — US credit unions have warned that proposed cuts to the Community Development Financial Institutions [CDFI] Fund could undermine lending to small businesses in underserved communities.
As part of its FY2027 federal budget proposals, the Trump administration has put forward US$ 204.5 million in cuts to discretionary awards for the CDFI Fund, a US Treasury programme that supports financial institutions and community lenders in areas neglected by traditional banks.
The move continues a pattern of previous White House proposals seeking reductions in funding. Industry figures warn this could significantly scale back – and potentially endanger – core grant programmes that support low-income and rural lenders.
National trade body America’s Credit Unions has denounced the proposals, arguing that CDFIs – which include many credit unions – play a critical role in providing financial services where traditional banks typically do not operate.
“Proposals to reduce funding for the CDFI Fund are concerning at a time when communities across the country rely on access to safe, affordable financial services,” said president and CEO Scott Simpson. “CDFIs play a vital role in expanding economic opportunity, particularly in underserved areas, and any reduction in support risks limiting that impact.
“With nearly 900 credit union branches serving as the sole financial institutions in those census tracts, credit unions are often the only access point for financial services and remain committed to reaching underserved communities wherever they are.”
Inclusiv, the US national apex for community development credit unions, has also criticised the proposals. Its president and CEO, Cathie Mahon, said: “At a time when Americans expect their government to deliver on affordability and economic opportunity, a proposal to cut funding for the CDFI Fund is deeply concerning.
“More than 70 per cent of CDFI credit unions serve rural communities, and they are effective stewards of federal funding, leveraging CDFI grants at least 8:1 with private capital. Investing in CDFIs is investing in economic opportunity for all Americans.”
Inclusiv drew comparisons with similar White House proposals last year, which also sought significant cuts to the fund. Following lobbying efforts and bipartisan support in Congress, the programme retained its full funding of US$ 324 million for 2026.
Congress has often restored funding for the CDFI Fund despite such proposals. However, both Inclusiv and America’s Credit Unions warn that federally approved award funds for FY2025 and FY2026 continue to be withheld by the White House, despite congressional approval.
https://thecooperator.news/success-as-us-credit-unions-hang-on-to-tax-exemption/
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