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Benefits to the Nation’s Economy

Small businesses play a critical role in the U.S. economy. 

They are central to creating jobs and restoring our 

economic prosperity. According to Federal Reserve Board 

data, small businesses employ roughly one-half of all 

Americans and account for about 60 percent of gross job 

creation. And newer small businesses, those less than two 

years old, are especially important: over the past 20 years, 

these start-up enterprises accounted for roughly onequarter of gross job creation.1

The Small Business Lending Fund enables community banks 

across the nation to help small businesses put Americans

back to work. 

How the Small Business Lending Fund Works

The Small Business Lending Fund aims to stimulate small 

business lending by providing capital to participating 

community banks.2

 The price a bank pays for SBLF funding will 

be reduced as the bank’s small business lending increases.

Because banks leverage their capital, the Small Business 

Lending Fund could help increase lending to small 

businesses in an amount that is multiples of the total capital 

provided to participating banks. These new loans will 

enable small businesses to grow and create new jobs.

The U.S. Department of the Treasury will provide banks

with capital by purchasing Tier 1-qualifying preferred stock 

or equivalents in each bank. 

The dividend rate on SBLF funding will be reduced as a 

participating community bank increases its lending to small 

businesses. The initial dividend rate will be, at most, 5%. If 

a bank’s small business lending increases by 10% or more, 

then the rate will fall to as low as 1%. Banks that increase 

their lending by amounts less than 10% can benefit from 

rates set between 2% and 4%. If lending does not increase 

in the first two years, however, the rate will increase to 7%. 

After 4.5 years, the rate will increase to 9% if the bank has 

not already repaid the SBLF funding.

Qualifying Small Business Loans

The Small Business Jobs Act defines small business lending

as certain loans of up to $10 million to businesses with up 

to $50 million in annual revenues. Those loans include:

• Commercial and industrial loans

• Owner-occupied nonfarm, nonresidential real estate 

loans

• Loans to finance agricultural production and 

other loans to farmers

• Loans secured by farmland

Overview of the Small Business Lending Fund

Enacted into law as part of the Small Business Jobs Act, the Small Business Lending Fund (SBLF) is a 

$30 billion fund that encourages lending to small businesses by providing Tier 1 capital to qualified 

community banks with assets of less than $10 billion. Through the Small Business Lending Fund, 

Main Street banks and small businesses can work together to help create jobs and promote 

economic growth in local communities across the nation.

The Small Business Lending Fund

• Supports Main Street banks, community development 

loan funds, and small businesses

• Enables community banks to access Tier 1 capital

• Provides incentives for Main Street banks to increase 

their lending to small businesses

[1] Ben Bernanke, Federal Reserve Board Chairman, “Addressing the Financing Needs of Small Businesses,” Federal Reserve Meeting Series, 

July 12, 2010.

[2] For purposes of this fact sheet, the terms “bank” and “community bank” encompass banks, thrifts, and bank and thrift holding companies 

with consolidated assets of less than $10 billion. This fact sheet does not apply to mutual institutions, Subchapter S corporations, or 

community development loan funds.
 

 

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Eligibility

An insured depository institution is eligible if it has assets of 

less than $10 billion and it meets the other requirements 

for participation. If the institution is controlled by a holding 

company, the combined assets of the holding company 

determine eligibility. Community development loan funds 

are also eligible.

Banks that have total assets of $1 billion or less may apply 

for SBLF funding that equals up to 5% of risk-weighted 

assets. Banks that have assets of more than $1 billion, but 

less than $10 billion may apply for SBLF funding that equals 

up to 3% of risk-weighted assets. 

The Small Business Lending Fund also provides an option for 

eligible community banks to refinance preferred stock 

issued to the Treasury through the Capital Purchase 

Program (CPP) or the Community Development Capital 

Initiative (CDCI) under certain conditions. 

An institution is not eligible if it is on the FDIC’s problem 

bank list (or similar list) or has been removed from that list 

in the previous 90 days. Generally, this will include any 

bank with a composite CAMELS rating of 4 or 5. 

Repayments

With the approval of its regulator, an institution may exit 

the Small Business Lending Fund at any time simply by 

repaying the funding provided along with any accrued 

dividends.

Application Process

If your institution wants to apply to participate in the Small 

Business Lending Fund, it must submit an application to 

Treasury at SBLFApps@treasury.gov.

The application form is available on the Small Business 

Lending Fund website at www.treasury.gov/SBLF. The 

application deadline for C Corporation banks is May 16, 

2011. Treasury encourages eligible institutions to submit 

their application as soon as possible to allow sufficient time 

for processing.

In addition to the application, your institution must submit 

a small business lending plan of approximately two pages in 

length to its primary federal regulator and to its state 

regulator, if applicable. Also, please note that the lending 

plan should not be sent to Treasury. (Your institution’s 

regulator will forward it to Treasury.)

Mutual Institutions, Subchapter S Corporations, and 

Community Development Loan Funds

Treasury is developing terms and guidance for mutual 

institutions, Subchapter S corporations, and community 

development loan funds. Terms for such institutions may 

vary from those described in this document, and separate 

application dates will apply for these institutions. 

Additional Information

To learn more, visit the Small Business Lending Fund 

website at www.treasury.gov/SBLF or make contact in one 

of the three ways shown below. 

For general inquiries and questions, please call the Small 

Business Lending Fund information line at 888-832-1147.

For communications pertaining to a specific institution, 

please email SBLFInstitutions@treasury.gov, a Treasury

email address.

For media inquiries, please call the U.S. Department of the 

Treasury Press Office at 202-622-2960.