The U.S. Treasury Department says its small business lending program has been a success in Illinois, reporting an increase of $464.8 million in loans to businesses through community banks.
The Small Business Lending Fund (SBLF) was designed to help credit-worthy businesses that had trouble getting loans in the wake of the 2008 recession by encouraging banks to lend as much as they can.
“Institutions pay us a dividend rate to hold the capital,” said Jason Tepperman, director of the fund. “We reduce the rate that we charge an institution as they increase their lending to small business, so they have an incentive to go out into the market and provide loans to credit-worthy businesses that are seeking capital.”
Out of the 21 banks in the state that participated in the SBLF, nine of them reduced that rate to 1 percent by increasing small business lending by more than 10 percent over their baseline levels.
Tepperman says the program did not specify what kinds of small businesses should receive the loans, but the majority went to those in the service industry and agriculture.