WASHINGTON — The Treasury Department will provide more-favorable terms on government aid to small banks and credit unions serving low-income areas as part of the Obama administration's broader push to encourage lending, officials said Wednesday.

The Treasury is expanding a program announced in October to provide government capital to Community Development Financial Institutions, or CDFIs, smaller firms that focus on lending in low to moderate-income communities. Eligible banks will now be able to receive more capital from the government--up to 5% of risk-weighted assets, as opposed to 2%--and the Treasury will match private investments in firms in order to increase the number of firms that have access to the program.

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