Key facts
- A business advocacy group sued the U.S. Treasury Department on Monday.
- The suit seeks to prevent nearly $300 million in federal grants from expiring at the end of the month.
- The Freedom Economy Business Association alleges the Treasury unlawfully failed to distribute fiscal year 2025 funding for Community Development Financial Institutions (CDFIs).
- The Treasury Department announced awards on September 15 but has not identified recipients or obligated funds.
- The Trump administration previously claimed CDFIs promoted a "partisan agenda," "gender extremism" and "climate radicalism."
- The funding delay has led one CDFI to close and could cause more to shut down.
A business advocacy group representing government-backed community lenders sued the U.S. Treasury Department on Monday, seeking to prevent nearly $300 million in federal grants from expiring at the end of the month. The Washington-based Freedom Economy Business Association filed the suit in U.S. District Court for the District of Columbia, arguing the Treasury unlawfully failed to distribute fiscal year 2025 funding approved by Congress for Community Development Financial Institutions (CDFIs).
CDFIs are specialized lenders that provide financing to small businesses, affordable housing projects, health clinics, and other community initiatives that often lack access to traditional sources of capital. The Treasury certifies CDFIs and distributes grants authorized annually by Congress. While Treasury announced awards on September 15, it has not identified recipients or obligated the funds, leaving the money at risk of expiring when the fiscal year ends on September 30, Freedom Economy said.
The group has asked the court to order Treasury and the Office of Management and Budget to distribute funds before the deadline and to move forward with an additional $289 million appropriated by Congress for fiscal year 2026. The Trump administration last year claimed these organizations promoted a "partisan agenda," "gender extremism" and "climate radicalism," claims they deny. The funding delay has already led one CDFI to shutter, and further delays could cause more to close, community lenders have warned. Tynesia Boyea-Robinson, chair of Freedom Economy, told reporters that many members are unable to serve the millions of people relying on them because the federal government has refused to follow the law. Alphonso David, CEO of the Global Black Economic Forum and lead counsel in the case, said the group expects a response from the courts within 48 hours.