News Release

New Jersey Department of
Banking and Insurance

Commissioner Tom Considine

For Immediate Release:
March 24, 2011

For Further Information:
Ed Rogan or Marshall McKnight (609) 292-5064

Commissioner Considine Announces That Seven State Banks Have Applied

TRENTON – New Jersey Department of Banking and Insurance (DOBI) Commissioner Tom Considine today announced that with the March 31 filing deadline approaching, seven state-chartered banks have applied for a total of $116 million from the federal Small Business Lending Fund (SBLF), which is making $30 billion available nationally to small banks and encouraging loans to small businesses.

“This fund provides capital to community banks and encourages lending to small businesses, which have traditionally been the engine of job creation,” he said. “Through these funds, capital is going to be available to small businesses through community banks and that capital will help those businesses grow and create jobs.”

The SBLF provides capital to qualified community banks with assets of less than $10 billion, which typically devote the highest percentage of their lending to small businesses in their communities. The  SBLF is administered by the United States Treasury.

Community banks have the opportunity to use this capital with business strategies and operating goals designed to address the needs of small businesses in New Jersey.

In the application process, state-chartered banks provide DOBI with their Small Business Lending Plan, which details their plans for making loans to small businesses in the New Jersey marketplace. The Department then provides requested information to the United States Treasury based on the lending plan and the overall financial status of the bank.

The Treasury Department will provide banks with capital by purchasing preferred stock in each bank. Community banks will repay the loans to the Treasury through dividends. Preferred stock is generally stock whose holders are the first to receive dividends from available profit. Preferred stock is redeemed before common stock when a company is liquidated.

The cost to community banks of the SBLF funding will be reduced as their small business lending increases. If a bank’s small business lending increases by 10 percent or more over the calculated baseline, then the dividend rate will fall to as low as one percent. 

“I am not saying that this fund is for everyone,” Commissioner Considine said. “Obviously each financial institution has its own balance sheet, its own strategy and its own situation. But for those community banks looking for capital to make small business loans in their communities, this is an opportunity worth consideration.”

For more information on the program, including how to apply go to: www.treasury.gov/SBLF