Federal loan funds finally arrive for some banks
Business Courier - by Kent Hoover, Washington Bureau Chief
Date: Friday, July 15, 2011, 6:00am EDT - Last Modified: Friday, July 15, 2011, 9:53am EDT
Money from the Treasury Department’s Small Business Lending Fund is making its way to community banks.
Six community banks around the country received $123 million in capital in the first round of funding provided by the fund, which is designed to increase lending to small businesses. Congress created the program last September through the Small Business Jobs Act, which authorized the Treasury Department to provide up to $30 billion in cheap capital to community banks. The program includes incentives for banks to use this money to lend to small businesses.
“Expanding access to credit for small businesses will provide a powerful spark for growth and job creation,” said Treasury Secretary Tim Geithner. “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.”
The program will be smaller than initially envisioned, however. Only 869 banks applied for a total of $11.6 billion in Small Business Lending Fund capital. Many community banks don’t need additional capital, while others are too weak to qualify for this government program.
The additional capital will make a difference, however, for community banks that are viable but can’t raise capital on their own.
“This lending fund will enable us to continue to grow our small-business loan portfolio and assist in the economic recovery in our markets,” said Tom Broughton, president and CEO of ServisFirst Bancorp in Birmingham, Ala.
ServisFirst received $40 million in Small Business Lending Fund capital.
Sen. Mary Landrieu, D-La., who fought for the creation of the fund, was pleased that a bank from her state, Community Trust Financial Corp. in Ruston, La., was one of the first to receive this capital. “I look forward to the success it brings to small businesses in the Ruston area,” Landrieu said.