Six community banks received a total of $123 million in the first round of loans from the Treasury Department’s Small Business Lending Fund, the department announced today. Earlier this year, Congress created the $30 billion fund as part of a bill aimed at creating additional jobs in the small business sector. The fund is available for community banks with assets of less than $10 billion. As banks make more business loans with the funds they borrow, the interest rate they pay is reduced.
“Expanding access to credit for small businesses will provide a powerful spark for growth and job creation,” Treasury Secretary Tim Geithner said in a statement. “These funds will help ensure that more Main Street entrepreneurs have the opportunity to expand their businesses, invest in their local communities, and create new jobs.” Credit unions are also trying to find ways to make more business loans. Legislation has been introduced in both the House and Senate that would raise the cap on member business loans from 12.25% of assets to as much as 27.5%.