Since the start of the economic downturn, small businesses in Michigan have had trouble getting loans. But a new initiative pushed by Rep. Gary Peters (D-9th Congressional) will provide a community bank in Farmington Hills with more than $11 million in funding to help jumpstart new lending.
On Thursday, the Treasury Department announced the release of $11.3 million to of Farmington Hills – part of $123 million provided to six community banks across the country through the Small Business Lending Fund. The fund was created last year through the Small Business Jobs Act, of which Peters authored key parts. Based on a bank’s typical ability to support $10 in lending for $1 of capital, this funding will lead to more than $100 million in new small business lending in Southeast Michigan.
“Small businesses in Michigan have been hit twice as hard by the economic downturn. Many large Wall Street banks won’t lend because of concerns about Michigan’s economy, and smaller community banks haven’t had the capital on hand to issue loans,” Peters said. “This program will put our investment where it will create the most jobs: helping community banks make crucial loans to small businesses here in Michigan.”
Peters was the first lawmaker to call for the creation of a small business lending fund in 2009 in a column in The Hill newspaper in Washington, DC. The idea was later endorsed by President Barack Obama in his 2010 State of the Union Address and was included in the Small Business Jobs Act passed by Congress last year.
Under the program, the Treasury Department will provide capital to community banks across the country that hold under $10 billion in assets. The dividend rate that each bank will pay on the funding will be reduced as the bank increases lending to small businesses – providing a strong incentive for new lending to help small businesses create jobs.
In May, Peters released a Congressional Report detailing how other federal small business lending programs directly resulted in a significant increase in loans to small firms in Oakland County.
Peters joined the House Small Business Committee this year. The Small Business Committee has jurisdiction over the Small Business Administration and its lending programs.