U.S. Treasury expands Small Business ‘Main Street’ program

A north Louisiana bank is among six financial institutions that will get a much-needed shot in the arm from the expansion of a federal program designed to strengthen community banks.

Ruston, La.-based Community Trust Financial Corporation offers personal and commercial banking products and services in Louisi­ana. It provides online banking, personal banking, insurance, business banking, and investment services. The company’s personal and business banking products include deposit accounts, checking accounts, health savings accounts, individual retirement accounts, money market accounts, certificates of deposit, consumer loans, real estate loans, business loans, residential and commercial construction loans, and lines of credit. Its investment services include financial planning, estate planning, investment products, personal and commercial insurance products.

The U.S. Department of the Trea­sury announced last week that six community banks received a total of $123 million as part of the first wave of capital provided by the Small Business Lending Fund (SBLF).

Established as part of the Small Business Jobs Act that President Obama signed into law, the SBLF encourages community banks to increase their lending to small businesses, helping those companies expand their operations and create new jobs.

“Expanding access to credit for small businesses will provide a powerful spark for growth and job creation,” said Treasury Secretary Tim Geithner. “These funds will help ensure that more Main Street entrepreneurs have the opportunity to expand their businesses, invest in their local communities, and create new jobs.”

In short, the SBLF program will enable the Community Trust Financial Corporation to aid more small businesses looking to create more jobs and financial opportunities for Louisiana residents. That, in turn, will lead to addition tax revenue that can be used to stave off cuts to critical areas like health care and higher education.

Small businesses play a critical role in the U.S. economy and are central to growth and job creation. Small businesses employ roughly one-half of all Americans and account for about 60 percent of gross job creation. But small business owners faced disproportionate challenges in the aftermath of the recession and credit crisis, including difficulty accessing capital.

The SBLF helps small businesses meet this challenge by providing capital to community banks that hold under $10 billion in assets. The dividend rate a community bank pays on SBLF funding is reduced as that bank increases its lending to small businesses – providing a strong incentive for new lending to small businesses so they can expand and create jobs.

The SBLF is one part of the Obama Administration’s comprehensive agenda to help small businesses access the capital they need to invest and hire. The State Small Business Credit Initiative (SSBCI), which is also a key part of the Small Business Jobs Act, allocates $1.5 billion to new and existing state programs that will leverage private financing to spur $15 billion in new lending to small businesses and small manufacturers. A total of 54 states and territories applied to take part in the SSBCI and 14 states have already had their applications approved for $488 million in SSBCI funding.

The Obama Administration has also supported 17 direct tax breaks that provide tax relief of more than $50 billion for small businesses. These tax breaks were designed to support job creation and retention, entrepreneurship, investment, and growth. The Administration has also worked with Congress to extend and expand existing Small Business Administration loan programs that helped put more than $42 billion in the hands of small businesses and deliver other important benefits to help small businesses expand and hire.

The full list of community banks that received funding through the first wave of SBLF capital includes the following:
• Community Trust Financial Corporation (Ruston, Louisiana) – $48.3 million
• Level One Bancorp, Inc (Farmington Hills, Michigan) – $11.3 million
• Pioneer Bank, SSB (Drippings Springs, Texas) — $3.0 million ServisFirst Bancshares Inc. (Birmingham, Alabama) — $40.0 million
• U&I Financial Corp (Lynn-wood, Washington) – $5.5 million Virginia Heritage Bank (Fairfax, Virginia) – $15.3 million

“This lending fund program will enable us to continue to grow our small business loan portfolio and assist in the economic recovery in our markets,” Tim Broughton, president and CEO of ServisFirst Bancshares, Inc. said.

This article originally published in the July 11, 2011 print edition of The Louisiana Weekly newspaper.