SBLF funds pay off TARP debt

10/6/2011

The $30 billion federal Small Business Lending Fund was intended to spur small business growth and fuel in the economic recovery. Instead, a mere $4 billion was handed out by the government, and many of the banks that received money used it to repay bailout funds from the Trouble Asset Relief Program, The Wall Street Journal reports.

According to the news source, the TARP program was a government initiative used to purchase assets and equity from financial institutions to strengthen its financial sector.

Fox Business adds that of the 332 banks that received SBLF funding, 137 used a portion of the funding to pay TARP arrears.

"It was basically a bailout for 100-plus banks," said Giovanni Coratolo, vice president of small-business policy at the U.S. Chamber of Commerce, as quoted by WSJ. "From a point of view of a small business owner, it was very ineffective in getting funds out to small business."

Some lenders used the entire allocation for repayment. Dubuque, Iowa-based Heartland Financial USA used the $81.7 million it received from the fund to pay back its TARP obligations.