Small Business Lending Fund 

Program Disbursement and Cost 

(Dollars in Millions) 

FY 2011 Estimates 

Program Level Subsidy Amount Subsidy Rate

$17,399 $1,260 7.24%

All investment activity will take place in FY 2011 

Program Summary by Budget Activity 

(Dollars in thousands)

Budget Activity FY 2010 FY 2011 FY 2012 Change FY10-FY12 

Actual Estimated Estimated $ Change % Change

 Program* $0 $1,260,000 $0 ($1,260,000) -100.00%

 Administration $0 $54,649 $72,603 $17,954 32.9%

Total Outlays $0 $1,314,649 $72,603 ($1,242,046) -94.5%

Total FTE 0 41 55 14 34.2%

*Reflects only on-budget amounts 

Summary 

 

Public Law 111-240, also known as the Small 

Business Jobs Act (hereafter “the Act”), 

established the Small Business Lending Fund 

(SBLF). The SBLF encourages lending to small 

businesses by providing Tier 1 capital to qualified 

community banks with assets of less than $10 

billion. Through the SBLF, Main Street banks and 

small businesses can work together to help create 

jobs and promote economic growth in local 

communities across the nation. 

FY 2011 and 2012 priorities include processing all 

received applications by September 27, 2011 in 

strict adherence to the eligibility requirements of 

the legislation; executing a compliance regimen to 

ensure that all fund participants abide with the 

terms of the program; and installing an asset 

management capability to effectively monitor the 

Fund and minimize risk to Treasury. 

Purpose of Program 

 

The SBLF is intended to increase the availability 

of credit to small businesses by providing capital 

to eligible institutions with assets of less than $10 

billion. The dividend or interest rate a bank pays 

for SBLF funding will be reduced as the 

institution’s qualified small business lending 

increases, relative to the bank’s baseline small 

business lending established at the time the 

applicant is awarded SBLF funding by the 

Treasury. Because banks leverage their capital, 

the SBLF could help increase lending to small 

businesses in an amount that is multiples of the 

total capital provided to participating institutions. 

These new loans will help small businesses grow 

and create new jobs. 

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 Federal 

Deposit Insurance Corporation’s problem bank list 

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

in the previous 90 days. 

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. 

Pursuant to the Act, all funds received by the 

Treasury in connection with purchases made, 

including interest payments, dividend payments, 

and proceeds from the sale of any financial 

instrument, will be used to pay down the public 

debt. 

Though all investments will be occurring in FY 

2011, the holding, managing, and selling the 

capital investments will require a staff presence in 

future years. The SBLF program office has been 

designed to ensure that strong internal controls are 

in place and that costs are minimized by 

leveraging existing Treasury infrastructure 

whenever possible. 

 

 

Explanation of Budget Activities 

 

Pursuant to the Act, all investment activity will 

occur in FY 2011. The Act also requires that the 

cost of purchases of preferred stock and other 

financial instruments made as capital investments 

shall be determined as provided under the Federal 

Credit Reform Act of 1990. 

After careful analysis and credit modeling, 

Treasury estimates a total program volume of 

$17.4 billion. Treasury credit modeling also 

indicates a projected subsidy rate of 7.24% and a 

budget cost of $1.26 billion for SBLF. 

The authority to pay administrative expenses is 

provided by Section 4108 (b) of the Act. 

Administrative expenses will include the costs of 

government employee salaries, contract support, 

and reimbursement to the Treasury Office of 

Inspector General for program audits. Pursuant to 

the Act, Treasury will be submitting semi-annual 

reports to the appropriate committees of Congress 

detailing administrative expenses. 

Legislative Proposals 

 

The SBLF has no legislative proposals. 

Description of Performance 

 

Performance metrics are currently in development 

for the SBLF and will be finalized in 2011.