Seeking Alpha

Christopher Menkin's  Instablog

Christopher Menkin
Send Message
Christopher "Kit" Menkin is of editor LeasingNews.org (http://www.leasingnews.org/), an internet trade publication for the finance/leasing industry. He has 41 years experience in the finance/leasing industry as well as being a founder of a commercial regional bank and serving on... More
My company:
Leasing News
  • Small Business Lending Grows Under SBLF, TARP Banks Lag 0 comments
    Apr 25, 2013 1:08 PM

    By Harish Mali, SNL Financial

    (click to enlarge)

    The U.S. government's Small Business Lending Fund (SBLF) appears to be accomplishing its goal of driving increased small business lending at banks.

    The remaining 269 bank participants have grown qualified small business loans by an average rate of 93.0% over the baseline at the end of 2012. This compares to average small business loan growth of just 5.6% at similarly sized banks who did not receive SBLF funding over the same period.

    Loan growth

    The aggregate qualified small business loans of the current banking participants stood at $44.7 billion at Dec. 31, 2012, compared to the baseline of $36 billion. The 50 community development loan funds (CDLF) - the other participants in the program - also recorded an average growth of 63.2% in the qualified small business loans over the baseline.

    The baseline, as defined under the program, is the average amount of qualified small business loans outstanding in the four quarters ended June 30, 2010. The amount may be adjusted to show the effect of any merger or loan purchase activity.

    For the small business loan growth at non-SBLF banks, SNL studied small business lending at non-SBLF banks with less than $10 billion in assets at Dec. 31, 2012. The analysis revealed that these banks have grown small business loans by an average growth rate of only 5.6% since June 30, 2010. The study included all small nonfarm loans secured by nonfarm, nonresidential properties and commercial and industrial loans to U.S. addresses with original amounts of $1 million or less and all small farm loans secured by farm residential and other improvements, and loans to finance agricultural production and other loans to farmers with original amounts of $500,000 or less.

    The Treasury defines qualified small business lending as all commercial and industrial loans, loans secured by owner-occupied nonfarm, nonresidential real estate, loans to finance agricultural production and other loans to farmers and loans secured by farmland, with the original principal and commitment amount of $10 million or less and the loan is not to a business with more than $50 million in revenues. It also excludes loan portions guaranteed by the U.S. government or for which a third party assumes risk.

    (click to enlarge)

    Most of the lending growth came from the non-TARP banks. Former TARP banks grew their qualified small business loans by only 26.2% over their baseline on average basis, whereas the non-TARP banks have more than doubled their qualified small business loans from the baseline at Dec. 31, 2012. The former TARP banks are those SBLF participants that used the SBLF proceeds to repay the TARP outstanding.

    The SBLF program, a brainchild of President Barack Obama, was enacted into law as part of the Small Business Jobs Act of 2010 (JOBS Act) to provide eligible financial institutions with capital in an effort to boost small business lending across the country. The Treasury had $30 billion available under the program, but it received 932 applications for only $11.8 billion, of which only 332 applications were approved for $4 billion in disbursements. Additionally, roughly half of the SBLF bank participants entered the program by exchanging TARP shares for SBLF shares.

    (click to enlarge)

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Back To Christopher Menkin's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers

StockTalks

More »
Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.