The federal banking agencies have issued guidance on underwriting standards for lending conducted under the Small Business Lending Fund (“SBLF”) Program. Additionally, the US Department of Treasury ("Treasury") has published guidelines on applying for the program. Responding to the impact of the financial crisis on small businesses and their access to credit, Congress enacted the Small Business Jobs Act of 2010 (the “Act”). The Act directs the Treasury to make capital investments in eligible financial institutions to stimulate small business lending. To carry out this goal, the Act authorizes the Treasury to purchase up to $30 billion in preferred stock and other financial instruments from qualified financial institutions.

Captial received from the preferred stock issued under the SBLF program will qualify as Tier 1 capital and carry an interest rate as low as 1%. Unlike TARP funding, SBLF funds will not require restrictions on executive compensation or the issuance of warrants. Banks that are interested in the Program should review the Treasury’s “Getting Started Guide” that can be found on the Department of Treasury’s website. Applications are due March 31, 2011.