June 16 (Bloomberg) -- Small banks applied for less than half of the $30 billion in capital available from a federal program to increase small-business lending, according to the U.S. Treasury Department.
A total of 847 banks sought $11.6 billion from the Small Business Lending Fund by a June 6 deadline, Colleen Murray, a Treasury spokeswoman, said in an e-mail yesterday. Of those applicants, 315 were seeking to use the funds to replace capital they had received earlier from the Treasury’s Troubled Asset Relief Program, the bailout for banks.
The SBLF was passed by Congress in September and provides capital at subsidized interest rates as low as 1 percent if the banks expand lending to small companies. The $30 billion, available only to lenders with less than $10 billion in assets, may generate as much as $300 billion in new loans, the Treasury has said.
“This news is a mixed bag,” said Todd McCracken, president of the National Small Business Association, a Washington-based trade group. “This amount is not as large as allowed but it’s a pretty good chunk of change. Small businesses need credit and capital when they’re poised to grow, but they don’t want to borrow until they’re in that position, and that’s where we are.”
Banks sensed weak loan demand and appeared unwilling to try and aggressively increase their capital until they received more loan applications from businesses, McCracken said.
“We are very happy with the interest in the Small Business Lending Fund and look forward to provide funding very soon,” said Murray. “In many markets access to capital remains limited and many banks lack the capital necessary to expand their lending, and this program will help address this challenge.”
--Editors: William Ahearn, Peter Eichenbaum
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