US credit unions step up lobbying efforts ahead of 2027 federal budget

US credit unions have warned that proposed cuts to the Community Development Financial Institutions (CDFI) fund could undermine lending to small businesses in underserved communities.

As part of its FY2027 federal budget proposals, the Trump administration has put forward $204.5 million in cuts to discretionary awards for the CDFI Fund, a US Treasury programme that supports financial institutions and community lenders in areas neglected by traditional banks.

This continues a pattern of previous White House proposals which have sought reductions to its funding. Industry figures have warned that this could significantly scale back – and even endanger – core grant programmes supporting low-income and rural lenders.

National trade body America’s Credit Unions has denounced the proposals, arguing that CDFIs – which includes many credit unions – play a critical role in offering financial services where traditional banks typically won’t.

“Proposals to reduce funding for the CDFI Fund are concerning at a time when communities across the country are relying on access to safe, affordable financial services, said president and CEO Scott Simpson. “CDFIs play a critical role in expanding economic opportunity, particularly in underserved areas, and any reduction in support risks limiting that impact.

“With nearly 900 credit union branches serving as the sole financial institutions in those census tracts, credit unions are often the only access point for financial services and remain committed to reaching underserved communities wherever they are.”

Inclusiv, the US national apex for community development credit unions, has also decried the proposals. Cathie Mahon, president/CEO of the organisation, said: “At a time when Americans are hoping their government will deliver on affordability and economic opportunity, a proposal to cut funding for the CDFI Fund is deeply concerning.

“More than 70% of CDFI credit unions serve rural communities, and they are effective stewards of federal funding, leveraging CDFI grants at least 8:1 with private capital. Investing in CDFIs is investing in economic opportunity for all Americans.”

Inclusiv drew comparisons with similar White House proposals last year, which also sought significant cuts to the CDFI Fund. Thanks to lobbying and bipartisan support from members of Congress, the fund was able to maintain its full funding of $324m for 2026.

Congress has often restored funding for the CDFI Fund despite such proposals – but, as Inclusiv and America’s Credit Unions warn, federally approved award funds for both FY2025 and FY2026 continue to be withheld by the White House despite Congressional approval.