Up to $1 Billion from TARP to Go to CDFIs

Posted by: Nick Leiber on February 03, 2010

Earlier today Treasury officials announced a new initiative that will use up to $1 billion from the Troubled Asset Relief Program to provide lower-cost capital to banks, credit unions, and thrifts that have been certified as Community Development Financial Institutions. The intention, officials say, is to boost the small business lending ability of CDFIs serving low- and moderate-income communities around the country that are struggling because of the recession.

Officials say term sheets will be available by the end of the week and certified institutions will be able to apply by the end of the month.

The CDFI program is separate from the legislative proposal Obama made yesterday to create a $30 billion fund to help community banks provide loans that will spur hiring by small businesses.

For a look at how CDFIs have been expanding their role as small business lenders, check out John Tozzi’s recent story.

Reader Comments

Tony

February 3, 2010 11:00 PM

Then when we give loans to all these low/moderate income communities aka non-performers, we will pyramid that debt as an asset as well, until the blackhole the banks have created swallows itself! Capital idea!!!

Obama's act will be to rename the United States of America to United States of Goldman Sachs.

rlt

February 4, 2010 12:40 PM

The community banks are in better shape than many of the big banks. However banks have learned that you can't trust the Obama Administration and his merry band of tax cheats. So pushing down money that the banks don't want anything to do with doesn't solve a perceived credit crunch. Collateral solves credit issues. The perception of a crunch is because banks now are wanting collateral. Clear concise intelligent policy out of Washington is what the business community is waiting on before we invest and expand.

Carol Cross

February 4, 2010 06:15 PM

Personally, I believe all of this emphasis on the "entrepreneurial sector" of the economy as the solution to our job problems is just a red herring to divert our attention from the real problem "Where ARE Americans going to Work in the 21st Century?"

However, President Obama inherited these problems. He didn't create the trade deficit. He didn't create the Global Economy and the problem it creates for the workers in high-wage economies. The SBA has been subsidizing small businesses for years as a matter of public policy. Read Mercutus on the SBA, George Mason University Research.

Ross Perot told us in the beginning of rush to maximize profits in the global economy that there would be a great "whooshing sound" as jobs were "sucked out of the American economy.

The Community Banks and Credit Unions are not going to loan money to those who are not credit worthy and don't have excellent collateral unless the government GIVES them this money with few strings attached.

The Community Banks know that 50% of all small startup businesses fail at sometime within the first five years and that this conversation about the "entrepreneurial sector" saving the economy and producing the needed jobs is just conversation and not reality.

Big problems but not problems produced by President Obama who has to work within a status quo that was not of his making.

http://thegreatfranchisingrobbery.blogspot.com

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What's it like to run your own company today? Entrepreneurs face multiple hurdles new and old, from raising capital and managing employees to keeping up with technology and competing in a global marketplace. In this blog, the Small Business channel's John Tozzi and Nick Leiber discuss the news, trends, and ideas that matter to small business owners. Follow them on Twitter @newentrepreneur.

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