The U.S. Treasury Department on Tuesday will unveil a new credit initiative that could spur $20 billion in lending to small businesses and could be beneficial to small minority-owned firms.
Specific details on Treasury's new initiative were slated to be discussed this week at a congressional hearing, where Gene Sperling, senior counsel to Treasury Secretary Timothy Geithner, will testify about the Obama administration's $30 billion small business lending fund and this new program.
In a Wall Street Journal article, Sperling said the new policy is modeled after 20 state-level initiatives known as capital access programs. Treasury is developing policies that will help small businesses in general. "But an important criteria for the initiatives that we support is whether they are especially effective in reaching small businesses--including minority businesses that are not being served well by traditional commercial loans," Sperling said.
While the rules of the state level programs vary, these programs generally involve having borrowers, lenders and local economic development entities contributing a certain percentage to an investment fund--which is used as collateral to support loans issued to borrowers. It isn't yet clear how Treasury will structure the new capital access program.
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