Report: Not All SBLF Banks Increased Small Biz LendingApril 17, 2013
Established by the Small Business Jobs Act of 2010, the Small Business Lending Fund (SBLF) was designed to encourage lending to small businesses by providing capital to qualified community banks and community development loan funds (CDLFs). While the U.S. Department of the Treasury has hailed the SBLF as a success, investing more than $4 billion in 332 institutions (even though the program was authorized to provide up to $30 billion), others have disagreed. Specifically, the Office of the Special Inspector General for the Troubled Asset Relief Program (TARP) stated in a recently released report that “many TARP banks primarily looked at the SBLF as an opportunity to exit TARP, escape TARP’s restrictions, and pay less for taxpayer money.” The report goes on to state that of the $4 billion in SBLF funds invested, $2.7 billion went to 137 TARP banks that then used $2.1 billion to repay TARP funds.
The report further stated that 132 out of the 137 former TARP banks did not “effectively increase small-business lending…. [t]wenty-four of the former TARP banks have not increased their lending. The remaining former TARP banks have increased lending by $1.13 for each SBLF dollar they received. By comparison, banks that did not participate in TARP but received SBLF funding have increased small-business lending by more than three times that amount – $3.45 for each $1 in SBLF funds.”
According to the most recent SBLF Program Report released on April 10, 2013, SBLF participants to date have increased their small-business lending by $7.4 billion over a baseline of $36.5 billion and that SBLF funds are expected to generate a positive return on investment of $50 million (excluding administrative costs). Initially, the SBLF program was expected to cost $1.3 billion.