The U.S. Treasury Department again stepped up its lending efforts this week, providing $608 million to dozens of community banks in order to spur small business lending and job creation across the nation.

Through the Small Business Lending Fund, established through the Small Business Jobs Act of 2010, 61 community banks received funds from the U.S. Treasury Department. This latest funding round will bring the total amount of funds extended to community banks across the nation up to 191, and  bring the total amount of funds disbursed through the government initiative up to $2.4 billion.

The banks receiving the most funding this time around included First Bancorp of Troy, N.C. ($63.5 million), CoBiz Financial Inc. ($57.4 million), Happy Bancshares Inc. ($31.9 million) and Planters Financial Group Inc. ($22.0 million).

For those unfamiliar with the SBLF fund, it’s lending initiative that in many ways mirrors the Troubled Asset Relief Program fund in that all funds borrowed by banks through the initiative must eventually paid back. The main differences between the SBLF fund and TARP is that the former wasn’t created to prop up struggling community banks, while the latter was created to sustain a struggling and highly undercapitalized banking industry.

Instead, the SBLF fund was formed as a mechanism to spur job creation by providing community banks the funds needed to extend additional loans to small businesses. The fund is worth $30 billion and provides capital infusions to community banks with assets of $10 billion or less by purchasing equity stakes in the participating banks. When a community bank borrows funds through the SBLF fund, they are required to pay a maximum dividend of five percent to the U.S. government. As these banks increase the amount of loans they extend small businesses, the dividend rate they are required to pay back to the federal government decreases.

The funds borrowed by community banks through the SBLF fund allow them to invest in their businesses and bring on more workers. According to the Treasury Department, small businesses employ more than half of all Americans and account for about 60 percent of gross job creation.

The most recent round of funding from the SBLF was earlier this month when the fund extended $767 million to 50 community banks.

According to the Wall Street Journal, the SBLF initiative has been criticized for allowing banks in the program to use funds to repay TARP funds.

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