S. 2718 — A bill to amend the Community Development Banking and Financial Institutions Act of 1994 to provide for capitalization assistance to enhance liquidity.

This section revises capitalization assistance authorities under the Community Development Financial Institutions (CDFI) Fund—established to support CDFIs, which have a primary mission of promoting community development, serve investment areas or targeted populations (e.g., low-income areas or underserved populations), and provide development services—to enhance liquidity for CDFIs as follows: (1) authorizes the Fund to provide funds to organizations (not required to be CDFIs) for purchasing loans originated by CDFIs, loan participations, or interests therein; providing guarantees, loan loss reserves, or other credit enhancements; or otherwise enhancing CDFI liquidity; (2) sets Fund discretion for selections based on eligibility (primary purpose of community development) and prioritization criteria (e.g., relevant experience in loan purchases, capacity to expand CDFI lending with private leverage, broad geographic or underserved borrower coverage); (3) increases the limit on assistance to a single organization to $20 million (from $5 million during any 3-year period); and (4) authorizes regulations. The section further redirects all funds received by the Secretary from emergency capital investments (including interest, dividends, and sales proceeds) into the CDFI Fund for use in the revised capitalization assistance or financial/technical assistance under sec. 108 (waiving matching funds requirements). Finally, this section requires the Secretary of the Treasury to submit annual reports to Congress through 2028 detailing Fund usage for these liquidity purposes, including amounts of loans/participations purchased, affordable housing loans supported, credit enhancements provided, effects on CDFI competitiveness, and impacts on CDFI liquidity.