Treasury Department Begins Spreading Funds To Local Lenders. Will You Benefit?

The US Treasury just freed up the first $123 million of the $30 billion or so that it will make available to local lenders through the Small Business Lending Fund created last year.

FIRST THINGS FIRST

The Small Business Lending Fund… is a government fund designed to funnel $30 billion from the Troubled Asset Relief Program (TARP) to community and smaller banks to support small business lending. The Fund also offers small business lending incentives to small community banks - the very banks that already make most small business loans. The $30 billion to start the Small Business Lending Fund would come from the TARP bank bailout money being paid back to the U.S. Treasury by the large banks.  "Expanding access to credit for small businesses will provide a powerful spark for growth and job creation," said Treasury Secretary Tim Geithner in a press release. "These funds will help ensure that more Main Street entrepreneurs have the opportunity to expand their businesses, invest in their local communities, and create new jobs."

As an incentive to the participating banks to increase their lending to small business, the dividends the banks pay on SBLF funding will decrease as their lending increases. Basically, the more the banks lend, the less they spend.

The Small Business Lending Fund is part of the Obama administration's overall plan to increase small business lending. Another element, the State Small Business Credit Initiative (SSBCI), is intended to generate at least $15 billion in locally-available small business loan programs. According to the Treasury Department, all 50 states and four territories have applied for SSBCI funding, and 14 states have already received $488 million in SSBCI funding.

AND HOW DOES THIS EFFECT YOUR BUSINESS?

What does this mean for your small business as you struggle for capital? Hopefully it means that capital may become easier to come by. But when? That’s a tough question; the answer to which only your banker may know. And what if, because of a very delicate economy that’s experiencing revised downward pressure from housing, employment, consumer confidence, etc, your banker still won’t budge? If you find yourself still struggling for capital, please consider factoring your invoices as a quick, relatively easy source of funds. Contact us now to learn about your many options.