Merkley, Boxer Urge U.S. Treasury to Start Credit Flowing to Small Businesses

Merkley, Boxer Urge U.S. Treasury to Start Credit Flowing to Small Businesses

Letter from Senators Encourages Implementation of Small Business Lending Fund Authorized by Congress in 2010

Washington, D.C. - Senators Jeff Merkley (D-OR) and Barbara Boxer (D-CA) sent a letter to Treasury Secretary Timothy Geithner Monday, encouraging him to implement the Small Business Lending Fund as soon as possible to provide community banks with $30 billion in capital that will help them leverage up to $300 billion in additional lending for small businesses on Main Street. The Small Business Lending Fund, modeled on the Merkley-Boxer Bank on Our Communities Act, was a central element of the Small Business Jobs Act of 2010, one of the most significant pieces of small business jobs legislation in over a decade.

Merkley and Boxer expressed frustration that more than six months after the Small Business Lending Fund was signed into law, “not one dollar has been issued,” despite ongoing challenges for small businesses seeking capital.  

“The Small Business Lending Fund is different from other small business lending tools previously made available because it utilizes community banks whose strength is small business lending,” wrote the Senators.  “In fact, this 7,000-strong network of small, Main Street lenders makes small business lending the centerpiece of their business.  Take 2009, one of the toughest years on record: banks with less than $1 billion in assets held 11 percent of the nation’s assets but made 48 percent of small business loans, and banks with less than $10 billion in assets held 23 percent of assets but made 67 percent of small business loans.  Clearly, one of the best ways to ensure small businesses have access to capital is to utilize the community banking network that serves them on a daily basis.”

The Small Business Lending Fund will provide capital to community banks that are in a position to increase small business lending.  Because the money is for loans that must be paid back, it will not cost taxpayers a dime. According to the Congressional Budget Office, providing additional capital to community banks through this program will save taxpayers $1 billion over ten years.

 The full text of the letter is available below.

###

The Honorable Timothy Geithner
Secretary of the Treasury
1500 Pennsylvania Avenue, NW
Washington, DC 20520

Dear Secretary Geithner: 

On September 27, 2010, President Obama signed into law the Small Business Jobs Act of 2010, one of the most significant pieces of small business jobs legislation in over a decade.  A central element of the Act was the Small Business Lending Fund.  Inspired by the Bank on Our Communities Act which we originally co-sponsored, the Small Business Lending Fund uses the lending network of the community banks to make capital available to Main Street businesses.  

We write now because more than six months after the authorization for the program, not one dollar has been issued.  This is against a backdrop that shows small businesses face continuing challenges accessing capital.  In fact, from the end of 2009 to the end of 2010, bank small business loans declined by 10 percent (and likely more given the sharp decline in personal lines of credit).  A range of factors affects this decline, but the Small Business Lending Fund was intended to be one more tool to help ensure that worthy small businesses can get the capital they need. 

The Small Business Lending Fund is different from other small business lending tools previously made available because it utilizes community banks whose strength is small business lending.  In fact, this 7,000-strong network of small, Main Street lenders makes small business lending the centerpiece of the business.  Take 2009, one of the toughest years on record: banks with less than $1 billion in assets held 11 percent of the nation’s assets but made 48 percent of small business loans, and banks with less than $10 billion in assets held 23 percent of assets but made 67 percent of small business loans.  Clearly, one of the best ways to ensure small businesses have access to capital is to utilize the community banking network has serves them on a daily basis.

Finally, we wish to remind you that the purposes of the Small Business Lending Fund are to provide capital to community banks which are in a position to increase small business lending, while protecting the safety and soundness of the financial institutions and the taxpayer.  It is critical that the program be implemented keeping those Congressional priorities in mind.  

In conclusion, we urge you to speed the availability of capital to small businesses and fully utilize the range of tools authorized by the Small Business Jobs Act. 

Sincerely,

Senator Jeff Merkley
Senator Barbara Boxer