Community Bankers Association of Illinois

Treasury Releases $30 Billion Small Business Lending Fund Guidelines

December 20, 2010

Today, the United States Treasury Department released guidelines for community banks to participate in the $30 billion Small Business Lending Fund.

The Small Business Lending Fund (SBLF) was first proposed by President Obama in his 2010 State of the Union Address. CBAI was an early and enthusiastic supporter of the SBLF. At a press conference in Chicago, CBAI leadership bankers Todd Grayson and Tony Sisto joined with Senator Richard Durbin to announce this legislative initiative. In the spring and summer, CBAI bankers visited Washington D.C. to voice support for the bill. The SBLF was enacted under the Small Business Jobs Act in late September. The goal of this program is to encourage additional small business lending, fuel job creation, and help create economic stability.

Under the program, SBLF funds carry a base dividend rate of 5 percent. Participants that increase their small-business lending will be able to lower their dividend rate to as low as 1 percent. Community banks with less than $1 billion in assets will be eligible for investments of up to 5 percent of risk-weighted assets, and banks with between $1 billion and $10 billion in assets will be eligible for up to 3 percent.

TARP Capital Purchase Program bank participants may generally be able to refinance TARP capital into the new SBLF program under better terms that do not include the many restrictions and additional warrant costs of TARP. Additionally, SBLF capital may be returned without penalty or impediment if there is a change in law that materially and adversely impacts a participating institution.

Please Click Here to visit the Treasury Department website for SBLF details.
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