A New TARP Program for Community Banks

The Administration has just announced a new small business lending initiative under the Treasury’s TARP. According to a White House release, the new initiative will offer lower-cost capital to small banks and community development financial institutions (CDFI) that support small business lending.

The Administration also intends to further support small businesses by seeking legislation to increase the maximum loan sizes of several Small Business Administration (SBA) loans. In addition to these proposals, the 2009 stimulus act has paid out over $115 million of the more than $335 million in available funding to SBA.

While the amount of TARP funds to be allocated for this program has not yet been determined, the American Bankers' Association has asked for $5 billion to support small business lending. An administration official stated that the small business proposals are budget-neutral over the long-run. The Administration also indicated that they are winding down assistance to the major banks to focus on spurring lending to small businesses.

As soon as the Administration releases details on the program's funding, CRFB will update the TARP program on Stimulus.org.