The Obama administration announced Wednesday that 37 community banks have received a total of $418 million in funds under a program designed to encourage local banks with less than $10 billion in assets to increase their lending to small businesses.
The $30 billion Small Business Lending Fund, established under the Small Business Jobs Act of 2010, so far has provided about $1 billion to 80 community banks, including the latest funding, the Treasury Department said.
It provides capital to community banks at favorable rates, so that the rate for a bank to repay the government investment is reduced as it increases lending to small businesses.
Many small businesses, which are estimated to generate around 60 percent of all new jobs created in the country, were pinched in the recession and credit crisis as they found it harder to get loans.
The 37 community banks are in California, Connecticut, Delaware, Florida, Illinois, Indiana, Kansas, Louisiana, Massachusetts, Maryland, Michigan, North Carolina, New Jersey, New York, Pennsylvania, Tennessee, Texas, Virginia and Washington state.
On Tuesday, the Treasury Department announced the approval of $360.9 million in applications by 11 states and the District of Columbia for funding under another small business-lending program that aims to attract $10 in private lending for each dollar in federal funding. States can use the federal money to support their programs to guarantee loans to small businesses.
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