Fifty more community banks across the nation will receive close to $770 million in federal funds as part of a program designed to promote small business lending and spur job growth.
The banks in question will receive $767 million through the U.S. Treasury Department’s Small Business Lending Fund, established last year through the Small Business Jobs Act as a mechanism to encourage community banks to extend more capital to small business across the country. To date, the Treasury department has extended more than $1.8 billion in funds to 130 community banks through the SBLF fund, and plans to make more disbursements in the coming weeks.
Banks receiving the most during this round of funding included Champaign, Ill.-based First Busey Corporation ($72.7 million), Springfield, MO-based Great Southern Bancorp Inc. ($57.9 million), Terrell, Tex.-based The ANB Corporation ($37.0 million) and Chula Vista, Calif.-based First PacTrust Bancorp, Inc. ($32.0 million).
“These funds will provide a powerful incentive for community banks to expand their lending to small businesses, spurring new investment and job creation,” said the Treasury Department’s Deputy Secretary Neal S. Wolin in a statement. “Breaking down barriers to credit will provide critical support to Main Street entrepreneurs looking to invest in their local communities, grow their businesses, and put more Americans back to work.”
In the most recent SBLF funding round announced 37 community banks received $418 million from the federal government.
The SBLF is a $30 billion fund that provides capital to community banks with assets of $10 billion or less. Profits paid out to the federal government on SBLF funds borrowed begin at 5% and are reduced when these financial institutions expand their lending activities. Similar to the Troubled Asset Relief Program that funded traditional banks, community banks that enter the SBLF program can exit it by repaying funds they’ve been provided in addition to any dividends reaped.
Treasury figures show that small businesses account for about 60 percent of gross job creation and employ more than half of the American workforce.