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Last September 2010, Congress created a program in an effort to help community banks provide more loans to small businesses and have enacted such into law as part of the Small Business Jobs Act of 2010, titling such as the Small Business Lending Fund (“SBLF”).

According to the US Department of the Treasury, the SBLF is a “$30 billon fund that encourages lending to small businesses by providing capital to qualified community banks with assets of less than $10 billion.” Secondly, the money is intended to free up capital to ensure banks are able to grant more loans to companies seeking to purchase necessary equipment and hire more employees.

Nine months later, this past June, the U.S. Treasury Secretary announced that banks were slowly being notified of their approval for the program. By July, the department announced the second wave of approvals: a total of $337 million was invested in 23 banks.

Some of the financial institutions who have been contacted include Redwood Capital Bank, a community bank based in Eureka, CA, who received a total of $7.3 million, and Pacific Coast Bankers’ Bank, a San Francisco specialty bank that supports community banks nationally through cash management and international payments processing services. [LA Times]

Rusty Cloutier, president and CEO of MidSouth Bank (southern Louisiana area) was ecstatic to hear of the news that his $1.2 billion in asset community bank received $32 million.

"We are extremely excited about getting it," said Cloutier.

CNN Money reporter Catherine Clifford, stated that Clothier thinks the money will help the businesses in his community.

"Certainly we are trying to get loans out to customers that are creating jobs," said Cloutier. "You know, it is not only creating jobs, it is also saving jobs."

However, not everyone felt a similar sentiment to the. Due to the lengthy amount of time that has elapsed since the enactment of the law, some financial institutions had grown impatient, stating that small businesses could have potentially received the aid within that timeframe. Also, some were hesitant to apply for the investment due to fear of being seen as a “bank in trouble”.

While 7,000 community banks are currently in existence across the nation, according to the Independent Community Bankers of America (“ICBA”), only 926 – slightly more than 13% - of total banks applied for participation within the program. [CNN]

Despite the two sides of the coin, it still remains to be seen on just how the banks will fair with the loans in the coming months.

What do you think? If you’re a Bank, have you requested or received funds SBLF? Share your thoughts with us!

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