Enacted into law as part of the Small Business Jobs Act of 2010 (the Jobs Act), the Small Business Lending Fund (SBLF) is a dedicated investment fund that encourages lending to small businesses by providing capital to qualified community banks1 and community development loan funds (CDLFs) with assets of less than $10 billion. Through the SBLF, participating Main Street lenders and small businesses can work together to help create jobs and promote economic growth in local communities across the nation.
In total, the SBLF provided more than $4 billion to 332 community banks and CDLFs. Since these institutions leverage their capital, the SBLF could help increase lending to small businesses in an amount that is multiples of the total capital provided.
Benefits to the Nation’s Economy
Small businesses play a critical role in the U.S. economy. They are central to creating jobs and restoring our economic prosperity.
The Small Business Lending Fund enables community banks across the nation to help small businesses put Americans back to work.
Communities across the country are seeing billions of dollars in Small Business Lending Fund money propel lending by community banks to small businesses in many multiples of that amount.
This map shows where participating institutions - Main Street banks and Community Development Loan Funds – are located in each state. Click on the map to see which participating banks are located near you.
How the Small Business Lending Fund Works
The SBLF encourages lending to small businesses (certain business loans2 that are $10 million or less in amount to businesses with $50 million or less in revenue) by providing capital to community banks and CDLFs with less than $10 billion in assets.
For community banks, the SBLF is structured to encourage small business lending through a dividend or interest rate incentive structure. The initial rate payable on SBLF capital is, at most, five percent,3 and the rate falls to one percent if a bank’s small business lending increases by ten percent or more. Banks that increase their lending by less than ten percent pay rates between two percent and four percent. If a bank’s lending does not increase in the first two years, however, the rate increases to seven percent, and after 4.5 years total, the rate for all banks increases to nine percent (if the bank has not already repaid the SBLF funding).
For CDLFs, the SBLF is structured to encourage small business lending through access to low-cost capital. These non-profit loan funds play a critical role in distressed communities across the country that lack access to mainstream financial services. CDLFs engage in activities ranging from offering microloans to entrepreneurs, providing mezzanine debt to growing small businesses, and financing community facilities like charter schools and health clinics.
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 For purposes of these web pages, the terms “bank” and “community bank” encompass banks, thrifts, and bank and thrift holding companies with consolidated assets of less than $10 billion.
 These loans are defined to include: (i) commercial and industrial loans, (ii) nonfarm, nonresidential real estate loans, (iii) loans to finance agricultural production, and (iv) loans secured by farmland.
 The initial interest rate paid by S corporations and mutual institutions is, at most, 7.7 percent. If these institutions increase their small business lending by 10 percent or more, then the rate falls to as low as 1.5 percent. These interest rates equate to after-tax effective rates (assuming a 35% tax rate) equivalent to the dividend rate paid by C corporation participants.