Small business lending increases in state
A new U.S. Department of the Treasury report shows that Pennsylvania institutions receiving capital through the Small Business Lending Fund (SBLF) increased their small business lending by over $401.4 million over their baselines.
The “Use of Funds” report represents the sixth consecutive quarter in which SBLF participants have increased lending to small businesses. Across the country, SBLF participants have increased lending by $7.4 billion overall and $740 million over the prior quarter. Community banks participating in SBLF have also increased business lending by substantially greater amounts than a peer group of similar banks across median measures of size, geography, and loan type.
“Community banks participating in the Obama Administration’s Small Business Lending Fund have consistently increased small business lending over the past two years, resulting in increased access to capital for thousands of small and family-owned businesses across the country,” said Neal Wolin, deputy treasury secretary. “With the help of lending supported by SBLF, these small businesses continue to grow and create jobs in their neighborhoods.”
The SBLF, established as part of the Small Business Jobs Act of 2010, encourages community banks to increase their lending to small businesses. The treasury invested more than $4 billion in 332 institutions through the SBLF. Collectively, these institutions operate in over 3,000 locations across 48 states. This report includes information on the 326 institutions that continue to participate in the program as of Sept. 30, including 275 community banks and 51 community development loan funds, or CDLFs.
SBLF encourages lending to small businesses by providing capital to community banks and CDLFs with less than $10 billion in assets. The dividend or interest rate a community bank pays on SBLF funding is reduced as the bank increases its lending to small businesses – providing a strong incentive for new lending to small businesses.
As of Sept. 30, the average rate paid by community banks on SBLF capital was two percent. Individual community banks can reduce the rate they pay to one percent if they increase qualified small business lending by 10 percent over their baselines.