The distribution of $250 million in government funds to the community-impact unit of St. Paul-based Sunrise Banks will result in $2.5 billion in increased credit to Twin Cities borrowers, the bank's top executive said Friday.

Sunrise was the only Minnesota financial institution to receive a portion of $8.3 billion in federal funds distributed for community lending this week. The funds were set aside in a pandemic-related stimulus package signed into law in December 2020 by then-President Donald Trump.

Sunrise will make the capital available through its community development subsidiary, called University Financial Corp. It will pay a 2% annual dividend on the investment.

"This is a fantastic asset for us to invest in underserved communities in the Twin Cities area," Sunrise CEO David Reiling said in an interview Friday.

He said the increased credit will flow to minority homebuyers and small-business owners in areas that were hardest hit by the pandemic and resulting downturn.

"For example, we have a successful mortgage program, generally for immigrants without permanent residency, in the Twin Cities, in which we use alternative forms of documentation. We want to expand that program, including to other communities around the state," Reiling said.

He said the firm will also expand its relationship with the Metropolitan Economic Development Association, the largest nonprofit finance provider in Minnesota.

The government funds were part of what's called the Emergency Capital Investment Program, or ECIP, which was part of the $900 billion round of government stimulus in late 2020. On Wednesday, the Treasury Department announced that 162 CDFIs would split up the $8.3 billion from the program.

"America has always had financial services deserts; places where it's very difficult for people to get their hands on capital so they can, for example, start a business,'' Treasury Secretary Janet Yellen said in a statement. "The pandemic has made these deserts even more inhospitable."

She added that the ECIP funds were aimed chiefly to communities of color and rural areas.

The Federal Reserve Bank of New York last year estimated that 40% of Black-owned small businesses nationally had closed due to the pandemic, compared with a 22% decline overall.

The online publication Bank Dive reported recently that a May survey conducted on behalf of the equal rights organizations Color of Change and UnidosUS highlighted weak relationships between banks and minority business owners.

"The ECIP program will help these places that the financial sector hasn't typically served well," Yellen said.