Small biz, banks may spurn Obama's $30B program | Seattle Times Newspaper

The $30 billion fund will be run by the Treasury Department, and money will be awarded to banks deemed strong by regulators. Banks that have less than $10 billion in assets are eligible.

"It will provide incentives to invest and create jobs for 4 million small businesses

Community banks will have to pay an annual dividend of 5 percent to the U.S. Treasury. However, when banks increase their lending to small businesses, their dividend rate declines on a sliding scale. So, if a bank increases its small-business lending portfolio by 2.5 percent, the dividend payment goes down to 4 percent and so on, ….The dividend payment increases to 7 percent if banks don't lend to small businesses.

new legislation, the government is taking steps to avoid the tarnish that accompanied TARP. The key part of this effort: Banks can return the money without penalty if rules governing the small business loans change.  But Chase, the bank CEO in Memphis, isn't convinced. "The rules can be changed any time," said Chase.

Business & Technology | Small biz, banks may spurn Obama's $30B program | Seattle Times Newspaper