In 2022, the Washington State Legislature set aside $200 million in the Community Reinvestment Account for the Department of Commerce to invest in communities with disproportionately harmed by the historical design and enforcement of state and federal criminal laws and penalties for drug possessions. Before authorizing Commerce to distribute this funding, the Legislature directed the agency to develop a Community Reinvestment Plan (CRP) to guide funding distribution from the Community Reinvestment Account. The final report outlines recommendations to implement $200 million in state resources that the Legislature appropriated to Commerce, in collaboration with state and community partners, including the Office of Equity, will distribute the funds through 17 grant programs falling across four program areas: economic development, civil and criminal legal assistance, community-based violence intervention and prevention services, and reentry services, in alignment with recommendations detailed in the final report.

The office of Economic Development and competiveness (OEDC) in Commerce will coordinate the implementation of the Community Reinvestment 17 Million dollar Loan Guarantee Fund. CRP Economic Development - Washington State Department of Commerce

The Loan Guarantee Fund is a pool of resources that provides funding and loan loss reserve to lenders across the state, including Community Development Financial Institutions (CDIFIs), local municipalities, and non-profit organizations in Washington. These lenders are able to leverage the pool for up to 10 times the fund amount (for example, $15 million can leverage $150 million in funding). These organizations offer financing and financial services to underserved communities that traditional banks often overlook. A loan guarantee fund is a fund set up to ensure the lender against default on the part of the borrower. This means that if the borrower fails to repay the loan, the guarantor (the entity managing the loan guarantee fund) will repay the loan to the lender on the borrower’s behalf. Loan guarantee funds are often used to encourage lending to small businesses, startups, individuals and other entities that might be traditionally considered “high-risk” borrowers. By guaranteeing the loan, the fund reduces the risk to the lender, making them more likely to issue the loan in the first place.

The initial fund is $17 million, and a single entity will oversee the fund, which community-based lenders can apply to access. Approval is based on lending history, underwriting processes, track record of serving or commitment to serve the intended beneficiaries, and report loan volume, loan averages, and assist in tracking committed guarantees from the fund until it is $100% committed. Impact investors and donors can contribute to the fund.

OEDC, through the Department of Commerce, is seeking information from potential intermediaries, lenders or both that address current market capabilities and operational processes that will ensure successful administration of these funds.

This RFI can be located on WEBS under Community Reinvestment Plan – Loan Guarantee Fund - Lender Participation - CRPLGFLP-3-26-24-RFI