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

For small businesses, $30 billion in fresh hope | Seattle Times Newspaper

So are there any cooperating small banks in the Rockford Metropolitan Area? 

President Barack Obama's $30 billion small community business lending program faces one big challenge: many of the community banks and businesses it's supposed to help don't want it.

federal legislation includes a new $30 billion Treasury fund that small banks can access, higher limits on loans, and tax cuts for small businesses

About 1,400 small businesses around the country have been awaiting Small Business Administration (SBA) loans, including 26 companies in the Seattle area. The SBA guarantees up to 90 percent of the amount borrowed, to reduce the risk for lenders.

Some banks question the need for more loans at a time when many business customers are still mired in a sluggish economy. The law does not compel them to lend.

Business & Technology | For small businesses, $30 billion in fresh hope | Seattle Times Newspaper