Minority-owned banks tend to serve people in communities where jobs have been hit hard by the pandemic, says banking consultant Mayra Rodriguez Valladares at MRV Associates.
“And so they’re withdrawing deposits from the banks. And so what that means is that the banks don’t have enough money to lend,” she said.
By purchasing a loan from a bank’s balance sheet, Citi is giving the minority-owned lender capital in return. Valladares says that can help those lenders issue more loans than they otherwise could with their own deposits.
“And really, right now, it’s critical to be making loans to as many people as possible,” she said.