Washington Report: Updates From the Capitol

Rand Paul backtracks on race comments; Small business bill advances

Small Business Lending Bill Moves Out of Committee

Small Business lending, Black EnterpriseWashington lawmakers are making yet another attempt to boost lending to small businesses. This time it’s the Small Business Lending Fund Act (SBLF), which the House Financial Services panel voted out of committee on Thursday. The bill would establish a $30 billion fund to provide credit for small businesses and ultimately spur job creation.

Banks with assets under $1 billion and between $1 billion to $10 billion would be eligible to receive capital investments of up to 5% and 3%, respectively, of their risk-weighted assets. In addition, regulator approval and a small business lending plan would be required to participate.

Dividend rates would start at 5% and decrease a percentage point for every 2.5% increase in small business lending, to a minimum rate of 1%. After five years, the dividend rate would increase to encourage timely repayment.

Republican committee member Rep. Jeb Hensarling of Texas calls the bill TARP with lipstick or at the very least its “kissing cousin.”

Darius Davis, executive vice president and COO for the Harbor Bank of Maryland (No. 11 on the BE100s Banks list with $304.6 million in assets), believes that the bill will encourage banks to lend and provides much needed capital at a time when it’s scarce for most lenders. But he also thinks the terms could be better.

Still, Davis adds, the bill could potentially benefit minority small businesses. “But the business owner still has to apply for a loan and convince the bank that the business is a viable concern and the loan will be repaid.”

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