White House Pauses Federal Grants and Loan Disbursements

The White House Office of Management and Budget (OMB) released a memo late yesterday, ordering a temporary pause on federal grants and loan disbursements to carry out President Trump's recent Executive Orders, effective January 28, 2025 at 5:00 PM. UPDATE: Minutes before the 5 p.m. deadline, U.S. District Judge Loren AliKhan blocked the Trump administration’s directive from taking effect. The judge's order will expire February 3 at 5 p.m. The OMB later rescinded the memo. Click here to read more: OMB rescinds memo on federal funds freeze | America's Credit Unions

We flag this for your attention because the recent action could potentially delay Community Development Financial Institution (CDFI) and Community Development Revolving Loan Fund (CDRLF) grant rounds for Fiscal Year 2025. Small Business Administration (SBA) loans, including 7(a) loan guarantees and 504 certified development loans may be impacted as well. Rest assured, America’s Credit Unions supports these programs and the valuable resources they provide to credit unions to better serve their members with access to the financial products and services they need.

CDFI-certified credit unions provide vital access to financial products and services in low-income communities through a variety of programs administered by the CDFI Fund, such as mortgage loans for first time home buyers and commercial loans to rebuild communities. Likewise, the CDRLF Grant Program provides financial support, including loans and technical assistance, to low-income designated credit unions (LICUs) and minority depository institutions (MDIs) to stimulate economic activities in their communities. The program is funded by congressional appropriations and administered by the NCUA.

Although recent grants from the Greenhouse Gas Reduction Fund (GHGRF) have already been awarded and dispersed, it is unclear whether the entire program may be under review according to this OMB memo. The GHGRF provides grants to fund clean energy and climate projects that reduce greenhouse gas emissions.

According to the memo, the temporary pause will provide the Trump Administration time to review agency programs and determine the best uses of the funding for those programs consistent with the law and the President’s priorities:  

“[E]ach agency must complete a comprehensive analysis of all of their Federal financial assistance programs to identify programs, projects, and activities that may be implicated by any of the President’s executive orders,” including but not limited to financial assistance for foreign aid, nongovernmental organizations, DEI and the green new deal.  

“Federal financial assistance programs” (2 CFR 200.1) means “[a]ssistance that recipients or subrecipients receive or administer” in various forms, but this term does not include assistance provided directly to individuals." Therefore, while the term includes grants, loans, and direct appropriations, it excludes SNAP benefits and Pell grants. In addition, Social Security and Medicare benefits are specifically excluded from the pause.  

Agencies are instructed to immediately identify and report to OMB any "legally mandated" actions or deadlines for assistance programs arising while the pause remains in effect. They must then submit detailed information to OMB by February 10th on any programs, projects or activities subject to this pause.  

Note that OMB may grant exceptions allowing agencies to issue new grant awards or take other actions on a case-by-case basis.  To the extent required by law, federal agencies may continue taking certain administrative actions, such as closeout of federal awards, or recording obligations expressly required by law.  

Please stay tuned for updates, as the situation remains fluid. State attorneys general (AGs) from New York, California, Massachusetts, Illinois, Rhode Island and New Jersey have said they plan to seek an injunction to block the Trump Administration's directive. AGs in Colorado, Michigan and Arizona announced that they will follow suit.