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The American Bankers Association is calling on the Treasury Department to provide more details about rejected applications for the Small Business Lending Fund.
September 14 -
The Treasury Department said this week it will distribute $4.3 billion from the Small Business Lending Fund, about a third of the funds that banks were seeking from the program and only 14% of the total available.
September 7 -
Some bankers are withdrawing the applications for the SBLF program after being held back by certain restrictions. Observers question whether the Treasury will deploy most of the funds in time.
August 17
WASHINGTON — The Treasury Department said Wednesday it distributed $1.6 billion to 141 small banks in the final wave of funding under the Small Business Lending Fund.
The $30 billion fund was established by Congress last year as a way to increase lending from small banks to small businesses. Critics have said the program was too slow to get off the ground and failed to entice enough participants to make a meaningful impact.
In total, 332 banks received more than $4 billion from the program. After a trickle of funding announcements this summer, the announcement Wednesday was by far the largest, as Treasury officials rushed to distribute the money before the program officially ended Tuesday.
"Billions of dollars in SBLF funds are now being put to use in communities all across the nation, spurring small business growth and job creation," Deputy Treasury Secretary Neal S. Wolin said in a press release. "This $4 billion investment, which will help propel lending by Main Street banks in many multiples of that amount, is good for our economy and good for America's small businesses."
Treasury officials have said they did not expect to distribute anywhere near the $30 billion that Congress allocated for the lending program, as only 933 institutions applied for $11.8 billion in funds.
In a revised white paper issued this week, Treasury said it issued preliminary approvals to 400 community banks, 68 of which decided not to participate. But it rejected nearly two-thirds of applicants, 40% of whom failed to meet the minimum statutory requirements, including approval from their primary regulatory and the ability to pay dividends.
The fund offered capital to eligible community banks with under $10 billion in assets. As the recipient banks increase their small-business lending, the dividend rate they pay back to the federal government will decrease.
The Independent Community Bankers of America and the American Bankers Association have called on the agency to release more details about why applicants were rejected, so banks may attempt to address the concerns.
"We are eager that the SBLF not fall short of achieving its potential," ABA President Frank Keating wrote in a letter dated Tuesday to Jason Tepperman, the head of the SBLF program.
Under the statute, however, the program expired on Sept. 27. There is no appeals process.
The funding recipients announced Wednesday included Western Alliance Bancorporation in Phoenix, which received $141 million, the largest amount received by a single participant.
Other recipients included First Merchants Corp. in Muncie, Ind., which received $90.8 million; Heartland Financial USA Inc. in Dubuque, Iowa, which received $81.7 million; TowneBank in Suffolk, Va., which received $76.5 million; First Guaranty Bancshares Inc. in Hammond, La., which received $39.4 million; Encore Bancshares Inc. in Houston, which received $32.9 million.
The program also distributed small amounts of capital to a number of community development financial institutions, including $188,000 to Appalachian Community Enterprises Inc. in Cleveland, Ga.; $240,000 to the South Eastern Development Foundation in Sioux Falls, S.D.; and $320,000 to ECDC Enterprise Development Group in Arlington, Va.
