Citi announced a partnership program Wednesday with the National Banking Association (NBA) to create a purchasing facility allowing it to buy loans from Minority-Owned Depository Institutions (MDIs).
According to a Citi press release, its purchasing facility will assume up to $50 million in Small Business Administration loans from MDIs. The partnership will provide NBA member banks with capital by enabling them to sell loans originated under the PPP to Citi in the secondary market.
The purchases will move the loans off the MDI’s balance sheet and over to Citi. The servicing of the loans will go through NBA banks and MDIs participating in the program can retain 100% of the fees earned through the loan with the SBA.
“Our country needs banks of all sizes to serve businesses of all sizes and from all communities. Citi actively partners with minority-owned banks to support their vital efforts to serve their diverse client base, and we applaud the work they did to ensure that the benefits of the PPP program reached minority-owned businesses,” Michael Corbat, CEO of Citi said in the release.
One of the African American-owned banks that will benefit from the program is Unity National Bank, which already has a partnership with Citi.
“We are pleased to participate in this asset sale with Citi. Unity was one of the first MDIs to solidify terms on this important initiative as we have witnessed firsthand how this pandemic has been felt most acutely by small business owners in the communities where we operate. By moving these loans off our balance sheet, we are able to redeploy capital into further assisting our customers and supporting our local economy,” said Laurie Vignaud, CEO of Unity National Bank.
Additionally, Citi has announced that it will donate its net profits earned through its own participation in the PPP to the Citi Foundation. The foundation will use the funds to support its Community Development Financial Institutions, delivering recovery capital to help underserved communities.
The program will complement the Citi Foundation’s COVID-19 U.S. Small Business Relief Program. A $7.5 million effort to support Community Development Financial Institutions to serve small, diverse entrepreneurs.
Citi has also started a $150 million effort to support African American businesses.