Finance & Lending

 

04 16 2013

04 16 2013

Some SBLF Money Used for Bank Bailouts, Not Small Business Loans

The U.S. government’s Small Business Lending Fund (SBLF) program is facing federal scrutiny after investigators discovered $2.1 billion of the SBLF program’s $4 billion fund went to bailing out banks rather than to financing small business loans, which was what the money was intended for.

Small Business Lending Fund under fire

Congress established SBLF in 2010 as a component of the Small Business Jobs Act, which enabled the U.S. Department of Treasury to invest money into qualified small banks to increase lending to small businesses. A new watchdog report by the Office of the Special Inspector General for the Troubled Asset Relief Program states the Treasury invested only $4 billion of the $30 billion available, which means the program did not effectively aid small business owners as much as expected. In addition, 137 banks out of the 332 that entered the SBLF program used those funds to pay back bailout money.

The government bailed out community banks in 2008 and 2009 under the Troubled Asset Relief Fund (TARP), and 132 of 137 of former TARP banks enrolled in the SBLF program have not increased small business lending, the report shows. Instead, many of those banks have been using the small business lending program and government funding as a means to exit TARP, rather than to help small business owners obtain proper funding, according to CNN Money.

The Office of the Special Inspector General for the Troubled Asset Relief Program conducted the audit to examine how two-thirds of the $4 billion in funds went to 137 TARP banks, which in turn used the $2.1 billion in government money to exit TARP in 2011. During this time, non-TARP banks received $1.2 billion in funds and actually increased small business lending by $4.2 billion, while the bailed out banks used 80 percent of the money to pay back TARP.

“The [program] objective was not to pay down TARP bailouts,” CNN Money reported Rep. Sam Graves, who chairs the House Small Business Committee, said.  “This is another example of an inefficient government gone awry.”

Treasury argues SBLF increased small business lending

In a response, the Treasury stated there is nothing faulty about the way the banks used their funds. The agency argued that it is inaccurate for the watchdog report to call the program ineffective because 84 percent of TARP banks did indeed increase their small business lending. Small business loans reportedly increased by 18 percent, which meant an additional $3 billion  – $1.13 for every dollar received – was lent to small business owners. An estimated 24 bailed-out banks that were part of the SBLF did not increase their small business lending at all.

Senior Executive Vice President of Frost Bank in San Antonio, Cliff McCauley, who steered clear of the government program told CNN that the audit findings were inevitable because bailed-out banks have been desperate to repay the costly bailout funds issued by the government.

Small business owners who did not benefit from the SBLF program may want to contact National Funding to obtain a small business loan or merchant cash advance.

Find Out How Much Funding You Qualify For

Fields marked with an * are required
By clicking this button I agree to all terms and conditions.

Terms & Conditions

General Acceptance

Any applications submitted electronically shall have the same force and effect as if the application bore an inked original signature(s). The above information, together with any accompanying financial statements, schedules, or other materials, is submitted for the purpose of obtaining credit and is warranted to be true, correct, and complete.

 

US Patriot Act:

To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person and business that seeks a business loan.  What this means for you: When you apply for a loan, we will ask for your business name, address, and Tax Identification Number.  We will also ask for your name, address, date of birth, and other information that will allow us to identify you.  We may also ask to see your driver’s license or other identifying documents.

 

For Loan/Merchant Services:

The Merchant and Owner(s)/Officer(s) identified in the application (individually, an “Applicant”) each represents, acknowledges and agrees that (1) all information and documents provided to National Funding, Inc. (“NF”) including credit card processor statements are true, accurate and complete, (2) Applicant will immediately notify NF of any change in such information or financial condition, (3) Applicant authorizes NF to disclose all information and documents that NF may obtain including credit reports to other persons or entities (collectively, “Assignees”) that may be involved with or acquire commercial loans having daily repayment features and/or Merchant Cash Advance transactions, including without limitation the application therefor (collectively, “Transactions”) and each Assignee is authorized to use such information and documents, and share such information and documents with other Assignees, in connection with potential Transactions, (4) each Assignee will rely upon the accuracy and completeness of such information and documents, (5) NF, Assignees, and each of their representatives, successors, assigns and designees (collectively, “Recipients”) are authorized to request and receive any investigative reports, credit reports, statements from creditors or financial institutions, verification of information, or any other information that a Recipient deems necessary, (6) Applicant waives and releases any claims against Recipients and any information-providers arising from any act or omission relating to the requesting, receiving or release of information, and (7) each Owner/Officer represents that he or she is authorized to sign this form on behalf of Merchant.(8) I consent to receive direct mail, faxes, and e-mails sent by National Funding and its affiliates for the purposes of transmitting account updates, requests for information and notices, and (9) this request is for business and not for consumer purposes.

 

For Equipment Services:

I hereby certify: (1) the information provided is true and correct, (2) you are hereby authorized to investigate all bank, credit, and trade references, and said references are hereby authorized to release any requested information to you or your nominee, (3) such authorization shall extend to obtaining personal credit profile in considering this application and subsequently for the purposes of update, renewal or extension of such credit or additional credit and for reviewing or collecting the resulting account, (4) this information may be transmitted by us to you and by you to underwriter(s) for the purpose of granting me credit, either electronically or manually, and that by submitting this application, I take full responsibility for transmission thereof, (5) I am over 18 years of age, (6) I acknowledge my rights under the Fair Credit Reporting Act, (7) I consent to receive direct mail, faxes, and e-mails sent by National Funding and its affiliates for the purposes of transmitting account updates, requests for information and notices, and (8) this request is for business and not for consumer purposes.

The Federal Equal Credit Opportunity Act prohibits creditors from discriminating against credit applicants on the basis of race, color, religion, national origin, sex, marital status or age (provided the applicant has the capacity to enter into the binding contract); because all or part of the applicant’s income derives from any public assistance program; or because the applicant has in good faith exercised any right under the Consumer Credit Protection Act. If for any reason your application for business credit is denied, you have the right to a written statement of the specific reasons for the denial. To obtain the statement, please write to National Funding Inc., 9820 Towne Centre Drive, San Diego, California 92121.  Funding amount and credit approval is subject to a full credit profile review.