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SME Access to Finance in the USA: Small Business Lending Fund Successful but Future Uncertain

The U.S. Treasury reported this week that the Small Business Lending Fund (SBLF) seems to have done its job. Institutions involved with the program significantly increased their lending to small businesses by $3.5 billion over a $35.9 billion baseline, which describes the average lending reported in the four quarters before the program began.

Enacted in 2010 as part of the Small Business Jobs Act, the SBLF is a dedicated investment fund designed to encourage lending to small businesses by providing capital to qualified community banks and community development loan funds (CDLFs) with assets of less than $10 billion. The program encourages lending to smaller firms with a dividend or interest rate incentive structure, which lowers the rate as the participating institution increases its small business lending.  

More than 60% of SBLF participants increased their small business lending by 10% or more, and, to date, 78% of community banks and 80% of CDLFs have increased their small business lending overall.

The SBLF generated some controversy in the summer of 2011 as the nation approached its debt ceiling, and the Treasury continued to make disbursements under the program. Although the fund appears to have functioned as well as one could hope, it expired in September of last year, and its future remains uncertain.

Courtesy of Jacob Barron, CICP, NACM staff writer

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