On September 27, the President signed into law legislation (H.R. 5297) that provides $30 billion in capital to community banks to expand small business lending.
The bill establishes a $30 billion lending funding, administered by the Treasury Department, to provide community banks with capital. The bill is designed to make it easier for small businesses to access capital.
Eligible small business lending activity includes loans made to businesses with annual revenues of no more than $50 million. Eligible loans include commercial or industrial loans; owner-occupied nonfarm, nonresidential real estate loans; loans to finance agricultural production; and loans secured by farmland.
The legislation extends through FY2013 the Small Business Administration’s (SBA) Dealer Floor Plan Financing Pilot (DFP) program, which provides a 60-75 percent guarantee on credit lines of between $500,000 and $5 million for the financing of inventory, including manufactured homes. For more information on the program, click here.
In addition, a new size standard is designed to allow larger businesses to qualify as a small business—the maximum net worth of the business cannot exceed $15 million and the average net income after federal taxes for the two previous fiscal years cannot be more than $5 million.
SBA’s existing DFP program ended on September 30, 2010 and the agency is expected to issue new program guidance and applications—to reflect recent statutory changes—within the next month.
Click here for more information on the legislation. For information on the DFP program, click here.