Small business lending program falls short

With little fanfare, a lending program launched by the Treasury Department came to a close last week, citing debate over whether or not the program was a “bust.”  Speculation was fueled by the fact that only $4 billion of a possible $30 million was actually lent out.  Reasons for that included lending standards being too high, the process being too cumbersome, or that small business demand for money is simply lower than expected. The program, as part of the Small Business Jobs Act, was designed to funnel $30 billion to local banks that had less than $10 billion in capital. The money was then supposed to be lent out to small business owners to help stimulate growth.  It was considered “cheap money” with low interest rates ranging from 1-5 percent. After more than a full year, only $4 billion was actually distributed. 

Only 933 community banks applied, requesting $11.8 billion.  87% of banks didn’t even apply, citing low demand.  In fact, Treasury said that 40% of banks that applied did not meet the program's basic requirements.

The question is, do small businesses across the country need access to money, in the form of loans, or are they simply more focused on driving customers and thus revenue?  As with the American Jobs Act, which has several provisions aimed at small businesses, do you feel that these government efforts are falling short and not aimed at your most pressing needs?