The economy's downward spiral couldn't have come at a worse time for Ronald Woods, president and CEO of the Kansas-based firm Industrial Supply. The work he'd begun on a mixed-income, mixed-use construction project had to be halted because banks simply weren't providing the lending he needed to continue. The Kansas City government, which had contracted him for the project, couldn't help because, like urban cores around the nation, its finances were tight, too. Woods has traditionally turned to major banks for his lending needs. But after last week's announcement that the Treasury Department will provide up to $1 billion in Troubled Asset Relief Program Funds to spur lending by Community Development Financial Institutions to businesses in the areas hardest hit by the economy, he'll be taking a closer look at some of the participating CDFIs that may well be the key to restarting his construction project. "These institutions operate in parts of the country where unemployment is way above the national average and where there's been a huge amount of damage to people's faith and confidence in the system,†Treasury Secretary Tim Geithner told a group of reporters following the announcement. "This program is a very powerful way to try to make sure that we're starting to open up some of the credit channels for businesses in parts of the country where it's most needed, and we think there's going to be a very high return.†The terms of the program, first announced last October, have been enhanced based on input from members of the CDFI community. The amount of capital available to participating institutions has been increased from 2% to 5% of their risk-weighted assets or loans, and credit unions can apply for an equivalent amount of total assets. CDFIs that previously received TARP funding will be allowed to transfer that capital to the new program. Participants will pay a dividend rate of 2%, compared to the 5% rate applied under the Capital Purchase Program. That rate will increase to 9% after eight years. The Treasury will begin accepting applications for funds by the end of February. According to Dorothy Bridges, CEO of Washington, D.C.-based City First Bank, she and several other community bankers had several extensive discussions with Geithner, members of Treasury's CDFI staff and, on occasion, President Barack Obama himself about how the program could be improved. (Continued on next page) "They needed to hear from us what we thought would work for our communities and what would work for our financial institutions with regard to the terms and condition,†said Bridges. "They listened, and where they could make some changes, they did.†CDFIs that do not receive regulator approval will be allowed to participate in the program if they can raise enough private capital investment that, when combined with matching funds from Treasury, they'll meet the viability standard. "The big banks go to the public markets to raise capital any time there's a shortfall, and regardless of how much money they've lost, they've still been able to raise capital,†said Joe Haskins, CEO of Harbor Bank of Maryland (No. 10 on the BE Banks list with $285 million in assets). "We don't have that luxury. This gives us an opportunity to enhance our capital base.†Bridges believes that the new terms will have "a very definite and significant†impact on black businesses and hopes that learning about the program will give them a more positive outlook on the lending landscape. "They listen to the same media that we do and because they're hearing that–for a number of reasons–banks aren't lending, many of them didn't approach banks like ours to inquire about loans,†she said. "I hope this will ease their uncertainty and make them feel like the administration is very serious about its efforts, and that community banks and CDFIs are serious about lending again. Something like this will jump-start their desire to get back in business.†Deborah Wright, CEO of Carver Federal Savings Bank (No. 1 on the BE Banks list with $789.9 million in assets), said the community bankers who met with Geithner this week explained to Treasury officials that the economy has had a more debilitating effect on the financials at black businesses. "Part of the capital will be used to make loans to companies that may not look as pristine as they did a couple of years ago. But when you have a cushion, you can take more risks as a bank,†said Wright. "There was a lot of pressure from our regulators to preserve capital, so this will be a shot in the arm for our industry. We have to let people know that we're back in business.†The news has been very satisfying for black lawmakers on Capitol Hill who had begun grumbling that the Obama administration had turned a blind eye to the devastation taking place in their districts, and its domino effect on local black businesses. "The administration is finally realizing that yes, there is such a thing as targeting–just as we targeted those big banks on Wall Street–and focusing help where the need is greatest,†said Rep. David Scott (D-Georgia), who sits on the House financial services committee. "That need is greatest in minority communities.â€