According to an email to Businessweek from Treasury spokeswoman Colleen Murray, a total of 847 banks sought $11.6 billion from the federal program by the June 6 deadline. Of those applicants, 315 were looking to put the funds toward replacing capital they had received previously from the Treasury’s Troubled Asset Relief Program, otherwise known as the bank bailout. Passed by Congress in September, the program provides capital at subsidized interest rates to lenders with less than $10 billion in assets if the banks expand lending to small companies.
“This news is a mixed bag,” said Todd McCracken, president of the National Small Business Association, a Washington-based trade group. “Small businesses need credit and capital when they’re poised to grow, but they don’t want to borrow until they’re in that position, and that’s where we are.”
While McCracken contends that banks experienced a weak demand for loans and seemed unwilling to aggressively increase their capital without more loan applications from businesses, the Treasury expects that the available capital may generate as much as $300 billion in new loans.
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