A Treasury Department fund meant to boost loans to small businesses has spurred more than $10 billion in additional lending, the agency said Tuesday.

The latest quarterly report for the Treasury's Small Business Lending Fund shows that the banks in the program have increased their small-business lending by $10.4 billion above baseline levels since the program began, and increased their lending by $1.4 billion in the second quarter. The total increase represents a 48% rise over the baseline, which is calculated based on the small-business lending of similar-sized banks that did not participate in the program, according to the Treasury's report.

"Crossing the $10 billion mark in increased small-business lending is an important milestone for these community banks, and underscores the positive impact that this Treasury program continues to have in local economies across the country," said Mary Miller, the Treasury's undersecretary for domestic finance, in a press release.

Ninety-two percent of SBLF participants have increased their small-business lending over the baseline over the course of the program, and 86% boosted their lending by 10% or more. The Treasury has provided $3.9 billion to community banks through the program, it said.

The Small Business Lending Fund, established in 2010, is open to banks with under $10 billion of assets, and provides funding at a variable annual rate that is designed to encourage small-business lending. Banks pay an initial annual dividend of 5% on funds they receive through the program; the dividend drops to 1% if the bank increases its small-business lending by 10% or more, and floats between 2% and 4% if the bank increases their small-business lending by less than 10%. However, banks that do not increase their small-business lending pay 7%.

Of the 264 banks in the program, Western Alliance (WAL) in Phoenix lent the most to small businesses in the second quarter, at $2.7 million, followed by Cadence Financial, at $2.4 million, the Treasury said. The banks that increased their small-business lending the most, as a percentage rise compared to their baseline level, were Financial Security Corp. in Basin, Wyo.; MVB Financial Corp. in Fairmont, W.Va.; and First Bank of Charleston in Charleston, W.Va.

Seventeen banks have fully redeemed their SBLF shares, while 14 have partially redeemed them, the Treasury said.

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