Small business loan fund amounting to $30 billion is supposed to add additional capital for cash-strapped entrepreneurs. But then ten months later those funds haven’t made it out of the coffers of US Treasury. This has left many amazed and wondering.
President Barack Obama in September 2010 signed the Small Business Jobs Act that has reserved $30 billion in small business lending fund for banks having less than $10 billion in assets. Banks are supposed to use this fund for lending out to small businesses, owners and advocates.
Obama administration is soon going to start distributing funds from small business lending program. Timothy Geithner, U.S. Treasury secretary says, “We have begun notifying banks that have been approved for the program, and expect to begin providing capital very soon.”
It is true that the funds are being readied for loan disbursements at a snail’s pace, but then interest among small community banks and their ilk to participate is also slim. Till now banks have only requested for a third of available funds that amounts to $11.6 billion. Treasury department received only 869 applications that is a meager in-comparison to 7,700 lenders who are eligible. One reason for this is a majority of community banks are already well capitalized. Also demand for small business loans is low. Then banks have to pay varying interest rates while repaying loans borrowed from the SBA if they aren’t able to meet the requirements as stated by the SBA.
This article was submitted by Raj Tulshan, Director of Business Development of Biz2Credit. Biz2Credit is a small business marketplace that connects entrepreneurs with financing options and advice to grow their business. Send all questions to