$30 Billion Small Business Lending Program Proposed

One of the pieces of pending legislation touted by President Obama last Friday is the $30 billion Small Business Lending Program currently being considered in the Senate. This is Congress’ response to Obama’s State of the Union proposal to create a Small Business Lending Fund. Together with tax breaks for small businesses the bill is supposed to help main street businesses to get the capital needed to begin to grow and employ workers again. A version of this bill has already passed the House.

The banks who receive the SBLP funds can use the funds to off-set losses from commercial real estate loans gone badly. There is no guarantee in the current bill, however, that requires banks to turn around and lend out the money that is saved. What is to stop the lenders from hoarding the money as they are currently doing in many cases?