The White House
Office of the Press Secretary
President Obama Outlines New Small Business Lending Fund
NASHUA, NH – Today, President Barack Obama outlined the new Small Business Lending Fund, which will transfer $30 billion from the Troubled Asset Relief Program to a new program that will support small business lending. The Small Business Lending Fund will be targeted at community and smaller banks that lend the most to small businesses, and offer incentives for banks to increase small business lending.
In the State of the Union Address, the President outlined a series of proposals to create jobs and grow our nation’s small businesses. Last week, President Obama outlined a new Small Business Jobs and Wages and Tax Cut to encourage hiring and create incentives for employers to increase wages for already existing employees.
President Barack Obama said, “Jobs will be our number one focus in 2010, and we’re going to start where most new jobs do – with small businesses. This proposal takes the money that was repaid by Wall Street banks to provide capital for community banks on Main Street. Together with our proposal to cut taxes for small businesses to spur hiring and increase wages, we are making the critical investments we need for our economic recovery.”
“As I have met small businesses owners from across the country, they all stress the same thing – to expand and hire, they need better access to credit,” said Treasury Secretary Tim Geithner. “The President’s proposal would take money repaid by the biggest banks and provide it to community banks so they can increase lending to small businesses.”
Small Business Administrator Karen Mills said, “Community banks are one of the strongest partners small businesses have in helping provide the capital needed to grow and create jobs. This fund targets one of the biggest challenges community banks have faced in this recession – capital to make more loans. This proposal, along with extending the SBA’s 90 percent guarantee, can help put small and medium-sized banks back in a position to step up their small business lending and support job creation in their communities.”
Key elements of the new Small Business Lending Fund are below:
Limited to Community and Smaller Banks Which Devote a Higher Share of Lending to Small Businesses: The Small Business Lending Fund would support lending among small- and medium-sized banks (with assets under $10 billion). These banks devote the highest percentage of their lending to small businesses in their communities, accounting for over 50 percent of all small business loans nationwide, even though they make up only about 20 percent of all bank assets.
Program Would Be Separate and Distinct from TARP to Encourage Participation: By transferring, through legislation, $30 billion to a new program that would be distinct from TARP, the Administration’s proposal would encourage broader participation by banks, as they would not face TARP restrictions.
A Core Function of New Fund Would Be Offering Capital With Incentives to Increase Small Business Lending: The Administration’s core proposal for the new lending fund is an initiative to invest in smaller banks capital under terms that provide strong incentives to increase lending. As participating banks increase lending to small firms compared to 2009 levels, the dividend paid to Treasury on that capital investment would be reduced.
Administration Will Discuss with Congress Additional Ideas to Enhance Credit for Small Businesses Through the Small Business Lending Fund. While the Administration is presenting its plan to provide capital with an incentive structure to maximize small business lending, it looks forward to discussing with Congress other ways that – in addition to what is described above – the Small Business Lending Fund could be fully deployed.
A full fact sheet is HERE.