Get All Access for $5/mo

Small-Biz Loan Money Finally Trickles to Community Banks The Treasury Department recently opened the spigot on the $30 billion Small Business Loan Fund. But is it too little, too late?

By Carol Tice Edited by Dan Bova

Opinions expressed by Entrepreneur contributors are their own.

Small-Biz Loan Money Finally Trickles to Community Banks

Talk about trickle-down economics.

With little fanfare, the U.S. Treasury Department finally began releasing funds from the $30 billion Small Business Lending Fund. That fund, which was authorized by the Small Business Jobs Act of 2010, was signed into law last September.

But only $123 million has been disbursed -- and only just half-dozen community banks around the country have received funds last week.

The Small Business Lending Fund was created to help small businesses overcome lending challenges by providing capital to community banks with less than $10 billion in assets. Community banks are said to be better-equipped to make small business loans because they tend to rely on relationships and may have a better idea about whether a business owner is a credible risk. Plus, these banks weren't as exposed to home mortgages, which entangled so many of their larger counterparts.

Admittedly, this is the "first wave" of capital provided by the Small Business Lending Fund. As of the end of June, the Treasury Dept. had received 869 applications amounting to an $11.6 billion drawdown from the program. But seeing the trickle of funds coming through, one has to wonder: Is it too little -- and too late?

No one quite seems to know. One thing's for sure, it could have happened more quickly. Senators who pushed for the fund have been hopping mad over the foot-dragging for months. Back in May, Sens. Jeff Merkley (D.,Ore.) and Barbara Boxer (D.,Calif.) were writing Treasury Secretary Timothy Geithner basically pleading for the loan fund to be implemented pronto.

About two months later, the tap finally has started to turn, a move applauded by community bankers.

There was no announced schedule of when the rest of the money will be in bankers' hands -- only a vague statement from Treasury that additional announcements about the Small Business Loan Fund will be "made on a rolling basis in the weeks ahead."

Would your business benefit if community banks were better funded? Leave a comment and let us know.

Carol Tice

Owner of Make a Living Writing

Longtime Seattle business writer Carol Tice has written for Entrepreneur, Forbes, Delta Sky and many more. She writes the award-winning Make a Living Writing blog. Her new ebook for Oberlo is Crowdfunding for Entrepreneurs.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick

Business Solutions

Increase Productivity with This Microsoft 365 Subscription, Now $25 Off

It can make the entrepreneur life a lot easier.

Business News

Apple Pay Later Is Ending. Here's What's Taking Its Place.

The program was available for less than a year.

Leadership

This Artist Answered a Businessman's 'Powerful' Question — Then His Work Became 'the Poster Child for Juneteenth': 'Your Network Really Becomes Your Net Worth'

Reginald Adams was the executive director of a Houston-based art museum for more than a decade before he decided to launch his own public art and design firm.

Leadership

Harvard Business School Professor Says 65% of Startups Fail for One Reason. Here's How to Avoid It.

Team alignment isn't nice to have -- it's critical for running a successful business.

Business News

Here's What Companies Are Open and Closed on Juneteenth 2024

Since it became a holiday in 2021, Juneteenth has been recognized by some major corporations as a paid day off.

Growing a Business

I Hit $100 Million in Annual Revenue by Being More Transparent — Here Are the 3 Strategies That Helped Me Succeed

Three road-tested ways to be more transparent and build relationships that can transform your business — without leaving you feeling nightmarishly over-exposed.