On October 30, Congress enacted the Reinvigorating Lending for the Future Act of 2020. The legislation reforms the Economic Development Administration’s (EDA) Revolving Loan Fund (RLF) program by eliminating the burdensome "in perpetuity" reporting requirements, and instead releases the federal interest in EDA RLFs after seven years. This change will provide more flexibility to EDA RLF operators in local communities across the U.S. NACo worked with members of the EDA Coalition to support this modification and reduce the administrative burden on EDA grantees.
The EDA RLF is part of EDA’s Economic Adjustment Assistance (EAA) program. Entities eligible to apply for EAA awards to establish an RLF include states, counties, cities or other political subdivisions of a state, as well as tribal communities, EDA-approved district organizations, institutions of higher education and public or private non-profit organizations. EDA awards funds to these local intermediary organizations who then issue loans to small businesses, local community organizations and service providers that cannot otherwise obtain traditional bank financing.
RLF grantees are currently required to report on loans made through the RLF program “in perpetuity”, which is unnecessarily burdensome. Reporting in perpetuity costs time and money which RLF grantees could be using to help small businesses and local organizations in need of working capital. Defederalization of the RLF after seven years will increase efficiency and allow for greater flexibility and usage of these loans.
Currently, EDA’s RLF is assisting communities during the COVID-19 economic crisis by providing additional resources to RLF operators. Many states and localities have received additional funding from the $1.5 billion allocated to EDA through the CARES Act relief package, to provide necessary capital to assist small businesses negatively impacted by the coronavirus pandemic. EDA grants are critical for county economic development, particularly in rural areas, where such resources are often scarce. NACo policy supports EDA, a vital federal resource for local economic development.
For additional NACo resources, please see the following links:
- NACo Blog: EDA announces funding opportunity for STEM Talent Challenge
- NACo Blog: EDA announces availability of CARES Act funding
- NACo Policy Brief: U.S. Economic Development Administration (EDA): Support Essential Seed Capital/Gap Financing for Local Job Creation
- NACo Blog: NACo testifies on the role of EDA in economic development and recovery