Emergency Capital Investment Program (ECIP)

What Is Emergency Capital Investment Program (ECIP)?

The Emergency Capital Investment Program (ECIP), established by the Consolidated Appropriations Act, 2021, was created so low- and moderate-income community financial institutions could make loans to small businesses and consumers.

The ECIP authorized the Department of the Treasury to provide up to $9 billion to Community Development Financial Institutions (CDFIs) or Minority Depository Institutions (MDIs) for loans, grants, and forbearances to small and minority-owned businesses in underserved communities impacted by the COVID-19 pandemic. Of the total, $2 billion was set aside for CDFIs and MDIs with less than $500 million in assets. An additional $2 billion was earmarked for CDFIs and MDIs with less than $2 billion in assets.

ECIP Eligibility

To be eligible for the ECIP, in addition to being either a certified community development financial institution (CDFI) or a minority depository institution (MDI), an entity must be:

• a federally insured depository institution, not controlled by a bank holding company (BHC) or savings and loan holding company (SLHC) that is also eligible for the ECIP;
• a BHC;
• an SLHC; or
• a federally insured credit union.

If a financial institution is not federally insured, it is not eligible to participate in the ECIP. This includes CDFIs that are not banking institutions, cooperatives based in Puerto Rico, and privately insured credit unions.

Application for the ECIP

Applicants are required to apply for the ECIP through an online portal. The deadline for application was Sept. 1, 2021. To be eligible to receive a capital investment under the Program, an Applicant must complete the ECIP application form after which Treasury will evaluate the application and determine whether the application is approved. As part of the application process, applicants must submit an Emergency Investment Lending Plan that:

• shows 30% or more lending over the past two fiscal years directly to low-to-moderate income (LMI) borrowers, other targeted populations, or a combination of the two;
• describes how the applicant's strategy and operating goals will address community development needs;
• includes a plan to provide community outreach and communication; and
• agrees to adhere to requirements on preferred stock and other financial instruments issued under the Program set forth in Section 104A(b) of the Community Development Banking and Financial Institutions Act of 1994.

Exclusions

Any entity for which a Beneficial Owner who is a government official directly or indirectly holds a 20% or larger interest is not eligible for any investment made under the ECIP. Under ECIP, each low- and moderate-income community financial institution may only issue financial instruments to Treasury with an aggregate principal amount (or comparable amount) that is not more than $250,000,000.

Financial instruments are also limited to "not more than 7.5% of total assets" for an institution with assets of more than $2,000,000,000. The limitation is "not more than 15% of total assets" for an institution with assets of not less than $500,000,000 and not more than $2,000,000,000 and not more than 22.5% of total assets for an institution with assets of less than $500,000,000.

Investment Limits and Termination

Across Program investments, Treasury may make not less than $4,000,000,000 available for Eligible Institutions with Total Assets of not more than $2,000,000,000 that timely apply to receive a capital investment under the Program, of which not less than $2,000,000,000 may be made available for Eligible Institutions with Total Assets of less than $500,000,000 that timely apply to receive a capital investment under the Program. The program will terminate six months after the President declares an end to the national emergency concerning the COVID-19 pandemic as called for under the National Emergencies Act.

The ECIP to Date

Although the Emergency Capital Investment Program (ECIP) is closed to new applications as of Sept. 1, 2021, the program continues to disburse funds according to guidelines provided by the Consolidated Appropriations Act, 2021. A March 8, 2022 audit of the program by the Treasury Office of the Inspector General concluded that officials acted swiftly to establish the program but did not begin accepting applications until March 4, 2021, well after the Jan. 26 statutory deadline. As of Dec. 14, 2021, 186 financial institutions had been approved for ECIP capital investments totaling $8.7 billion.

The Bottom Line

The Emergency Capital Investment Program (ECIP) is a specifically targeted loan program for low- and moderate-income financial institutions that helps those entities provide loans, grants, and forbearances to small businesses and individuals impacted by the COVID-19 pandemic.

As of Dec. 14, 2021, the U.S. Department of the Treasury had approved 186 financial institutions to disburse up to $8.7 billion. Although applications are no longer accepted, disbursement of funds continues.