The Treasury Department said Wednesday that it would use as much as $1 billion from the Troubled Asset Relief Program to spur lending to small businesses in lower-income areas.
Under the initiative, banks, thrifts or credit unions that are certified by the Treasury as community development financial institutions can apply for capital injections.
CDFI firms are set up to invest in urban and rural areas marked by poverty and often not served by traditional banks.
The program, which is created under the authority from the 2008 rescue law and doesn't require congressional approval, was announced by President Obama in October. The administration has come under fire from lawmakers and voters for using the $700-billion bailout to aid the largest Wall Street banks rather than average Americans.