WASHINGTON, DC – Today, Congressman Jimmy Panetta (CA-20) announced that he introduced the Revolving Loan Fund Flexibility Act, to provide localities greater flexibility in using federal economic development funds delivered during the COVID-19 pandemic. The legislation will allow local governments to repurpose funds that have been loaned from and repaid to a revolving loan fund, so that they can better target federal funds for projects that stimulate and revitalize local economies.
“Our state and local governments are facing increased pressure as the COVID-19 pandemic persists. Congress acted by passing the CARES Act, which included $1.5 billion in economic development assistance to help communities prevent, prepare for, and respond to this crisis,” said Congressman Panetta. “As our communities transition from responding to this crisis to recovering from it, we should ensure they have the ability to invest federal funds where they are needed most. This legislation will permit communities that have that have lent out Economic Development Administration (EDA) awards through a revolving loan fund to repurpose them once the loans have been repaid. This will allow localities to use this funding for infrastructure projects, tourism marketing, downtown revitalization, or other initiatives that will revitalize our communities as the crisis recedes so that they can continue to grow and thrive.”
“The Revolving Loan Fund Flexibility Act would provide the County with an important tool to help us maximize the limited economic development funds we receive from the federal government so that our residents and businesses can receive the assistance they need to help us grow our local economy,” said Chair Chris Lopez, Monterey County Board of Supervisors
Revolving Loan Funds (RLFs) capitalized with EDA funding are critical for lending to small businesses during a crisis, but when these RLFs become overcapitalized, “idle” funds can go unused. As communities shift from responding to the crisis to recovering and reinvesting, the Revolving Loan Fund Flexibility Act will permit idle funds to be repurposed for more stimulative uses, should a revolving loan fund have more cash available for lending than the average cash available for lending in its region.